As many baby boomers face retirement, they don’t want to be responsible for the maintenance or costs of a large home—many baby boomers look forward to traveling more frequently during retirement. In addition, their children are often grown and living on their own. For these reasons, and many others, baby boomers are choosing to move to smaller residences, a trend known as downsizing.
70 percent of people aged 50–59 who intend to move for retirement will do so because they are looking for more affordable housing, according to a 2005 Harris Interactive study on baby boomers. 66 percent of those people will move because they want a better community lifestyle (respondents were not limited to one answer).
Jeff Levy, a franchise owner of The Entrepreneur’s Source, has yet another reason for downsizing. “Simplification,” he said. He and his wife Andrea, a community college math professor, “just don’t need all the stuff.”
The Levys made the decision to downsize to a downtown Seattle condo in a new development. Before making the move, they did research on the Internet and talked with their son, who is a realtor. They also asked themselves a lot of questions.
“What lifestyle did we want, urban or suburban?” Levy said. “Could we do things better for the environment and our health? How could work and non-work activities coincide and not conflict?”
Levy and his wife plan to gradually limit their schedules. “We have no expectation of a full retirement,” Levy said. They chose a development located near area highways and with a common area that provides a suitable work environment to make their working lives easier. The Levys plan to stay in their condo as long as they are healthy.
“Baby boom retirees and non-retirees will tend to stay engaged not only physically and socially, but also intellectually in various work venues and hobbies,” William H. Frey wrote in a 2006 study of America’s demographics by the Brookings Institution.
50 percent of people aged 50–59 and 59 percent of people aged 41–49 intend to buy a new home for retirement, according to the Harris Interactive study. Shelley Dewey, vice president of Global Footwear Product Creation at Nike, and her husband Craig currently live in a five bedroom, four bathroom house in Lake Oswego, Oregon.
“We certainly don’t need anything that large with our children grown and living independently,” Shelley said. The majority of baby boomers plan to downsize their home, but still have a guest room for visitors, according to the Harris Interactive study.
Many baby boomers take family into account when choosing their retirement residences, through planning to be near their families, to have space set aside for guests, or both. “If they’re leaving town, they’re usually going to different climates and sometimes they’re moving closer to their families, their children, their grandchildren,” Fred Mattison, a Seattle area realtor, said. “It just depends on what the need of the specific couple or boomers is.”
The Deweys have four children, the youngest of whom is still in college. “Until she is done, we plan to stay in our current home,” Shelley said.
In some cases when baby boomers aren’t ready to transition to their retirement residence yet, they are buying their retirement residences ahead of time, intending to use them as investments before they use them as residences. “Some baby boomers are buying homes now…and they’re planning on moving into them in five to 10 years,” Frey wrote.
Craig said that the Deweys would downsize “to make our current home available to a large, younger family who will enjoy the lake.” They want to downsize to a three bedroom residence. They have discussed building a small new retirement development with a group of their close friends.
“It would be five or six townhouse style—no yard maintenance—self-contained, but adjoining residences with a common entertainment or social great room concept as a centerpiece where we could get together for some special meals, parties, family gatherings, sports and entertainment events,” Craig said.
The development would be located on or near a golf course and in a sunny climate. One of the units would be devoted to a full-time nurse, who would be on call 24 hours per day. This type of retirement community appeals to the more active baby boomer.
“You might see seniors starting to buy in, and even become part of, developing senior places,” Jeff Brown, a principal with Brown and Brown Investment Properties, said. “In the next 20 years, that will not be rare.”
Downsizing provides baby boomers with a lot of flexibility. By choosing a condo or retirement community, they can avoid a lot or even all of the maintenance associated with owning a larger home. Retirees can save a lot of time, and in some cases money, by downsizing.
The most popular reasons to transition to a community lifestyle, according to the Harris Interactive study, were not having to do yard maintenance and having convenient fitness opportunities.
In addition, many are able to avoid taking out a mortgage on their retirement residence. Some baby boomers can pay for their retirement residence in full by selling their primary residence. That is not always the case, however; many who plan to downsize in space plan to upgrade in terms of elegance and amenities.
“Usually they’re going to a newer residence where the finish levels are much higher than the homes they’ve lived in for 10 to 30 years,” Mattison said. “They’re looking for all of the up-to-date amenities in the home.”
The baby boom generation has more wealth and a longer life expectancy than their parents’ generation, and seems poised to take advantage of both upon retirement.
