Retirement isn’t just about how much you’ve saved—it’s also about how you choose to live. For many retirees, one of the most influential financial decisions may not be in the stock market, but in the home they live in.
Housing expenses are often the single largest budget item in retirement. Exploring ways to adjust this cost by downsizing or relocating can help retirees reduce financial pressure, unlock flexibility, and preserve savings for future priorities.
Let’s explore how smart housing choices can support your retirement goals, and what to consider before making a move.
Why Housing Costs Matter So Much in Retirement
When full-time work ends, fixed expenses often remain—and housing typically accounts for nearly one-third of retiree spending. That includes mortgage or rent payments, insurance, utilities, property taxes, and ongoing maintenance.
Making changes to reduce this cost could:
- Free up cash flow for other needs
- Allow access to home equity
- Reduce annual tax or insurance costs
- Simplify upkeep and maintenance
By lowering housing expenses, retirees may gain greater flexibility to address rising healthcare costs, enjoy travel or leisure activities, or reduce portfolio withdrawals.
The Case for Downsizing
Downsizing doesn’t have to mean giving something up—it may simply mean aligning your living situation with your current lifestyle and goals. After children move out, many retirees find they no longer need as much space.
Potential Financial Advantages of Downsizing
- Reduced or eliminated mortgage payments: Selling a larger home and purchasing a smaller one may remove monthly loan obligations.
- Lower property taxes and insurance premiums: A smaller home may have a lower tax assessment and cost less to insure.
- Reduced maintenance and utility expenses: Less square footage may mean less cost and effort for upkeep.
- Access to equity: If your home has appreciated, selling could unlock funds for other retirement needs.
Lifestyle Considerations
- Simplification: Less clutter, fewer responsibilities, and more time for hobbies or travel.
- Accessibility: Downsizing to a single-story home or condo may support aging-in-place.
- Proximity to amenities: Some retirees use downsizing as a chance to move closer to healthcare, family, or community activities.
The Case for Relocating
In some cases, a smaller home in the same area may not reduce costs enough—or you may be seeking other benefits. Relocating can offer a broader opportunity to reshape both your lifestyle and financial plan.
Factors to Evaluate
- State tax environment: Some states (e.g., Florida, Texas, Tennessee) have no state income tax, which could reduce the impact on retirement distributions.
- Cost of living: Moving to a lower-cost region may help stretch retirement savings further.
- Healthcare access and affordability: Quality medical care is essential in retirement. Compare provider access and insurance costs in potential new locations.
- Lifestyle preferences: Warmer climates, walkability, and community amenities can all influence the experience of retirement.
Illustrative Examples: What a Move Could Look Like
Example 1: Downsizing Locally
Tom and Linda, both 67, decided to sell their four-bedroom suburban home. They purchased a smaller condo and used proceeds to reduce debt and bolster their savings. As a result, they saw reductions in housing costs, property taxes, and maintenance time—while gaining easier access to healthcare and travel opportunities.
Example 2: Relocating for Lifestyle and Cost Savings
David and Maria sold their home in a high-cost city and moved to a lower-cost state with no state income tax. Their new location offered a lower property tax rate, milder weather, and a smaller home that met their lifestyle needs. The relocation helped reduce their ongoing expenses while aligning better with their personal preferences.
⚠️ These scenarios are for illustrative purposes only.
Planning Beyond the Numbers
Moving in retirement isn’t only a financial decision—it often carries emotional and logistical complexity.
Emotional Factors
- Leaving behind memories or community: Downsizing may involve letting go of a family home and longtime neighbors.
- Rebuilding social networks: A move to a new city or state could mean adjusting to unfamiliar surroundings.
- Alignment with lifestyle goals: Consider whether the new location supports activities, access to care, or proximity to loved ones.
Practical Planning Checklist
- Compare cost-of-living and housing expenses between current and new locations.
- Understand state and local tax impacts on retirement income.
- Evaluate proximity to medical facilities and transportation options.
- Discuss plans with family members, especially if caregiving or proximity is a factor.
Downsizing vs. Relocating: Which Option Fits Best?
Each option carries trade-offs and potential benefits:
Option | May Be a Good Fit If You… |
Downsize | Want to stay in your current area but reduce monthly costs |
Relocate | Are seeking a lower cost of living or a different lifestyle |
Final Thoughts
While retirement planning often focuses on portfolios and account balances, housing choices can be just as impactful. Whether downsizing or relocating, adjusting where you live may offer ways to reduce stress, simplify life, and increase financial flexibility.
However, every move comes with trade-offs. By weighing financial, emotional, and logistical factors—and involving a financial advisor in the process—you can make an informed decision that supports both your retirement goals and quality of life.
Considering a move in retirement? At TruNorth, we help individuals evaluate the financial, emotional, and tax considerations that come with downsizing or relocating. Schedule a complimentary consultation to see how your housing choices can support your long-term plan—without compromising your lifestyle.
Disclosure
This material is provided for informational purposes only and does not constitute legal, investment, or tax advice. Resolute Capital, LLC, dba TruNorth Advisors, is a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training.