Retired? Here's Why Moving During Retirement Can Make You Up to $100K

While younger Americans tend to move more often, it's those of retirement age that are experiencing significant financial gains from changing addresses.

A recent study from Vanguard showed that about 60% of homeowners aged 60 and above who moved to a cheaper housing market in 2019 (the latest available data) extracted about $100,000 in home equity.

And some are unlocking a whole lot more. Here's how they're doing it.

Tapping into homeownership wealth

Vanguard combed through housing market and retirement data and found that the median homeowner aged 60 or older who sold their home and moved to a cheaper part of the country -- lowering their mortgage responsibility -- provided them with nearly $100,000 in home equity.

Not only is that a significant financial gain in and of itself, but it's even more meaningful when considering that the average homeowner in that age group has $223,000 of savings in retirement accounts. This means that for some retirees, selling their homes and moving to a less expensive area puts them in a significantly better financial position in their retirement.

And even more gains were made for those at the top of the financial hill. People in the 60-or-older age group with a net worth of at least $2.2 million -- the top 10th percentile -- accessed $347,000 in home equity when they opted for cheaper mortgage payments elsewhere in the country.

Buy, hold, then sell

The Vanguard report showed that 80% of Americans aged 60 and over are homeowners and that housing wealth accounts for about half of the group's median net worth. This means that owning real estate has been essential to this group's financial well-being.

The researchers noted that based on the current number of homeowners in this age group and the percentage of those who make non-local housing moves, about 25% of all those aged 60 or older could use a retire-and-relocate strategy over a 10-year period to unlock significant home equity.

Deciding when to sell is a personal decision, based on more factors than just financial ones. But the benefits are clear for those who relocate to less expensive homes.

Find a cheaper place to live

Of course, buying a house and holding onto it for many years is one of the key ingredients for this retirement strategy. And while housing costs have increased and interest rates are currently elevated, there are always pros and cons to buying a home.

Shopping around for the best mortgage lender can help you track down the best interest rates, and taking steps like improving your credit score and building up your savings account balance will put you in a better position to make that purchase.

According to Vanguard, the other part of this strategy involves finding a cheaper place to live, likely in the South or Midwest. Unsurprisingly, those who opted to move to a more expensive area of the country didn't improve their financial situation.

So if you're looking to easily improve your personal finances in retirement, the data clearly points to the benefits of moving to a cheaper housing market. Just maybe don't tell your retired friends where you're considering relocating. After all, you don't want to start a real estate gold rush before you snag a good deal.