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An Audacious Retirement Goal: Upsize Your Home

By Selena Maranjian – Apr 21, 2015 at 10:00AM

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Most retirees downsize their homes, but some are opting for bigger ones.

Source: Daniel Oines, Flickr

A typical retirement scenario might look like this: You sell your beloved home of many years and move into a smaller one, perhaps in a less-expensive region, in order to simplify your life and save money, too.

Some retirees, though, are doing the opposite -- upsizing instead of downsizing. They're buying bigger homes, and sometimes even moving to a more costly region. See whether such a move makes sense for you.

Why upsize?
Why on earth would people in retirement -- presumably a couple, with an empty nest -- decide to upsize? Several reasons. For one thing, a bigger home can accommodate more guests. If you want your kids, your kids' kids, and your friends to visit and stay a while, having a spacious home will be more enticing to them. A plus here is that if you anticipate wanting to travel less as you get older, you'll be setting yourself up to have your loved ones travel to see you, instead.

If you don't have children, you still might be anticipating others moving in -- perhaps to care for you when you're older and your health is failing. Or perhaps you're aware of family members or friends who may be needing a place to stay for a while -- such as your kids between jobs or relationships, or even your own parents. You might also be able to more easily accommodate live-in help, if you can afford it, with a bigger home. Or you might take in some roommates to help with expenses and foster more socializing.

Another reason to upsize is to get a home with features that anticipate your needs down the road, such as wider hallways (think of walkers or wheelchairs) and big bathrooms with a lot of room to maneuver.

Some retirees move near a location that will attract visitors. Source: kcxd, Flickr.

Finally, know that some upsize their home not only in its dimensions, but also in its location. For example, your big new home might be located near an area known for skiing, or near beaches, or near an exciting urban area. The reasoning here is again to draw family and friends for visits. You might get fewer visits if you're living out in the country in Ohio than if you're near New Orleans, or Boulder, Colorado, or Orlando, Florida.

A final reason that motivates many retirees who upsize is that they just want a fancier, more prestigious home. They may be thinking that in the last decades of their lives, after working hard for many years and making sacrifices, they deserve to treat themselves.

Why you might think twice
Given all of the reasons above, you might be thinking of upsizing now. Well, it's still not the best option for many, if not most, retirees. For one thing, you might go to the trouble of upsizing into a luxurious home in a desirable area, only to end up with visitors not arriving. The whole process of moving is costly, too -- in dollars and also in stress, as you shop for a new place, pack, move, and unpack. If you've changed regions, you'll need to make new friends, find new doctors, new service providers, perhaps a new church, and a host of other things.

It will likely be more costly to maintain the bigger home, too, since it will require more cleaning and maintenance, and will probably cost more in taxes, insurance, and so on. All of that extra money will be money not kept in reserve for your living expenses in retirement. For many people, it's money they will need to live off of, and money they really can't devote to a bigger home. Some people don't have to deliberate too much about whether to upsize because they simply can't afford to.

The case for downsizing
Many people downsize as they approach or enter retirement because there are many benefits to doing so. You'll have less house to clean, a smaller yard to maintain, and lower taxes and insurance, too. If you sell a larger, more valuable home and buy a smaller and less valuable one, you can bank the difference, saving it for retirement. (Of course, if you move from a costly region to one with a much lower cost of living, it's possible to actually buy a bigger home and still save money!)

Many retirees find that a small house suits them just fine. Source: Sheila Sund, Flickr.

A 2014 Merrill Lynch Retirement Study found that among retirees who moved to a new home, 51% moved to a smaller one, 30% moved to a larger one, and 19% moved to a home about the same size as their previous one. That's a perhaps surprisingly large number of people upsizing, but still far more downsizing.

What to do
What you end up doing as you approach or enter retirement will depend on your financial circumstances and your personal circumstances, among other things. For many people, the best thing to do is to just stay put in a home and neighborhood that's extremely familiar and comfortable.

Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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