Downsizing vs Aging-in-Place: Considering Retirement

By Lauren Rosales-Shepard, Content Writer

The older population in the United States is greatly increasing, with the number of seniors (those 65 or older) expected to almost double by 2060. Life expectancy, too, has climbed. As a result, a growing number of homeowners find themselves en route to retiring into a conundrum: do I stay in my home and age in place, or do I downsize?

The pros and cons of each option seem at first obvious. If you downsize to a smaller home, you will have much less space to maintain (especially yard-wise!). On the other hand, if you stay in your home and age in place, you’re in your home–you know the space, the community, already. Downsizing requires moving, and when has that ever been anyone’s idea of A Good Time? But your current home is full of empty rooms, now that your children have grown up and flown the coop; it can be lonely.

It’s a tremendously weighty decision. Like any life-altering choice, there are complexities to consider, and there is no one-size-fits-all solution.


If the members of your household have dwindled to two or one, you would undoubtedly embrace being responsible for less space. You would have fewer rooms to clean if you downsized, not to mention less (if any) yard to mow and rake. Plus, were you to relocate, you might possess the luxury of choice–without needing to be near a job, you could choose to be near family, or in a more appealing climate, for example.

Homeowners who look to relocate into a smaller autonomous home may, however, run into severe cost issues. Purchasing a home in today’s market will subject one to skyrocketing mortgage rates amidst ever-rising inflation. Both of these factors may make it more difficult for you to sell your current home for the funds to purchase a new one—that is, if you can even find one! There is a extreme housing shortage. In addition, there is an even more blatant scarcity of smaller homes, as they are simply no longer being built. But seniors who would be open to apartment-living (no yard!) face an obstacle, too: the paucity of multifamily housing. Nationwide, there is very little zoning that permits multifamily housing to be built. Zoning often not only prohibits multifamily dwellings in particular, but also might limit the heights of buildings and include minimum lot-size and square-footage requirements. Those apartments that can be built tend to be luxury condos, or publicly-subsidized low-income housing–nothing in the middle, which is often the space that seniors on a fixed income would financially occupy.

Similar dynamics exist in the senior living industry, which is continuously innovating to present desirable options to aging adults of means. Senior living facilities often put on social events, and promote opportunities for residents, however independently they are able to live, to meet, mingle, and form friendships. This is great news for one’s health, as social isolation and loneliness frequently have deleterious effects on seniors–indeed, the related health risks are comparable to that of smoking and obesity! Frequent social interactions can slow symptoms of dementia in aging adults.

A recent New York Times article describes a recently-developed “luxury senior living community” featuring five restaurants, an outdoor pool, landscaped courtyards, highly-trained wellness staff, and an on-site “care coordinator.” The proximity of so many necessities and amenities alike are especially enticing to not only the 50% of seniors who don’t believe their community has reliable or effective public transportation, but also the more than 25% of older adults in their 60s who fear their communities don’t have the resources they will need as they age.

Unfortunately, however, the level of comfort and security ensconced in a development like the one mentioned in the article does come at considerable cost. Monthly rental rates at that particular abode range from $7,900 for a simple studio to $16,660 (and up!) for two-bedroom apartments. And although there are less extravagant options (the same article mentions a development where residents will volunteer for 10 hours each month to cut down on costs, for example), even these require an upfront payment of hundreds of thousands of dollars in addition to monthly rents. While this level of wraparound support in a housing arrangement might be the ideal scenario for many seniors, it also might not be a realistic option for many homeowners looking to downsize.


According to AARP surveys, 90% of seniors (65+) want to age in place–in other words, to remain in their current homes. The main reason for this preference is a desire for social connectedness; those who are already familiar with and active in their communities do not want to lose that built-in social network. Although many assisted living facilities, retirement homes, and luxury senior living developments do feature social activities and engagement, it is daunting for anyone to start from scratch and facilitate new friendships. It can be even more difficult for an aging individual who is more likely to want to cling to the familiar.

Familiarity is also key to a sense of agency and independence. While a new neighborhood could be difficult to navigate, if one were to age in place it might be easier to satisfy the basic needs–groceries, clothing, appointments, etc–without help. Access to affordable transportation options tends to be scarce, and so those aging adults who cannot or do not drive themselves become isolated and are far less likely to take active steps for self-care. Those who opt to age in place frequently do so because it seems like the best way to maintain their autonomy for as long as possible.

There are significant factors to take into account when considering aging in place. Do you foresee yourself needing assistance with activities of daily living? Will you require help with chores and additional home/yard maintenance? Even if you don’t think that either of these possibilities belong to the near future, it’s important to make a plan just in case. This plan can include at least budgeting for various potential home modifications, as well as for services you may later need–lawn care, snow removal, grocery delivery, dog-walking, routine in-home medical care, etc. If you live in a two-story house, you should be especially cognizant of the potential renovations that you may require: installing or tightening handrails, placing extra lighting and non-slip material on the stairs, even installing a lift in case of extreme loss of mobility. Bathroom renovations, in particular, may need to be extensive. You may want to consider whether it is possible to relegate your daily life to the main floor alone, as well.

There are many resources available to seniors who wish to age in place. Habitat for Humanity, for example, has an Aging in Place program that collaborates with human services organizations to help provide home repairs and modifications to the homes of seniors. USAging is the national association that represents the nationwide network of Area Agencies on Aging; they have many resources for transportation, elder justice, caregiver supports, and referral assistance. The Eldercare Locator is also a public service provided by the U.S. Administration on Aging, and features a hotline fielded by specialists who can answer questions and connect seniors to resources in their communities. Individual states have specific resources that can usually be found by searching their Health and Human Services websites, too. If you have extra space and are worried about getting lonely, third-party services exist that can even help you find a compatible housemate!

An important consideration for anyone considering retirement is the affordability of housing. The Urban Institute recently reported that most older Americans are woefully unprepared to pay for their living expenses once they retire. Because the number of senior homeowners who have mortgages has nearly doubled since the late 1980s, and those mortgage balances have been sharply increasing, retired seniors frequently find themselves with monthly payments with which they simply cannot keep pace. Imagine adding the cost of necessary home modifications to those already encumbering costs.

One solution to this problem is for aging homeowners to tap their home equity. As the Urban Institute points out, however, many of the vehicles with which seniors can do this are less than ideal. Home Equity Lines of Credit (HELOCs) merely add to a homeowner’s burdensome list of monthly payments, and because many have variable rates, the interest can unexpectedly and drastically increase. Cash-out refinances can be risky, too, due to interest rate increases–plus, they require an income to support the mortgage debt.

However, a Unison equity sharing agreement neither requires monthly payments nor incorporates interest. Qualifying homeowners can receive up to 17.5% of their home’s current value in cash, or up to $500,000. Rather than monthly payments, the homeowner pays back the original amount, plus a percent of the home’s change in value, when the home is sold. A recent survey of Unison homeowners found that the two most popular uses of their agreements was to consolidate (or eliminate) debt, and to renovate their homes. The savvy planner looking ahead might see both of these as key components to preparing one’s home and finances for aging in place.

The most important thing to consider is what works best for you. There is no one right answer for everyone. Aging-in-place may be statistically popular, but not all places are suitable for that plan. You must think of your own priorities, financial situation, as well as health profile to make the most logical, beneficial decision. Be sure to talk to your doctor, your family members, and your heirs to gather the most relevant and informed perspectives.

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