What lifestyle do you want in retirement?

Many people consider moving in retirement. But research shows that the majority choose to stay put. In a 2016 Freddie Mac survey, 63% of homeowners age 55 and older said they’d “prefer to age in place.” It’s certainly the easiest option. Or rather, it’s the easiest option for the short term. Moving is a big step. It means saying good-bye to your home, sorting through your belongings, and deciding what to give away and what to keep. But it can also mean embracing a new, lower-maintenance lifestyle. Then there’s the cost. Housing accounts for more than 33% of total expenses for many seniors, according to the Bureau of Labor Statistics. That’s a big chunk of the budget. Even if you think you’ll stay in your home after you retire, it’s still worthwhile to consider your options. Here are some of the pros and cons of different living situations.

Option 1: Stay in your home

If you have a “stay in my house” mindset, you can make a good case for staying put. Pros include the ability to:

  • Stay in a familiar community. Moving can mean leaving friends, family, churches, and social groups.
  • Reap the benefits of a mortgage-free home. If you’re mortgage-free, you might be reluctant to leave a home you worked so hard to own. If this is the case, staying could be an affordable choice.
  • Keep space for entertaining. You might not want to downsize if you see your home as a hub for family and friends to gather.
  • Use your home-improvement skills. Maybe you enjoy maintaining your home and take pride in the improvements you’ve made. If your hobby is landscaping or decorating, staying in your home can help keep you engaged in retirement.

Then there are the cons. Here are just a few that may apply to your situation:

  • Hidden costs. According to home experts, you should set aside 1%–3% of the purchase price of your home for maintenance and repairs every year. Of course that varies significantly from house to house and from year to year. If you’re a long-time homeowner, you’re probably well aware of the price of a new roof or furnace and how much it costs to have your driveway plowed.
  • More space, more work. If you live in a large single-family home, chances are you’re cleaning (or paying someone to clean) rooms that are rarely used.
  • Physical challenges. No one wants to think about the physical limitations that can come with getting older. Unfortunately, it’s a part of life for many people. There may come a day when a flight of stairs becomes a challenge.

Option 2: Downsize to a smaller home, condo, or townhome

If you decide to sell your home and buy a smaller house, condo, or luxury townhome like the ones near me, your benefits may include:

  • More money to invest. If you can sell your home for a profit and move to a smaller, more affordable place, investing the difference will boost your retirement savings. Keep in mind, you don’t have to pay capital gains taxes on the first $250,000 of equity if you’re single ($500,000 if married filing jointly). To qualify for this tax exclusion, you have to meet certain criteria. For example, you must have owned and lived in the property for at least 2 of the 5 years before you sell it.
  • Lower bills. A smaller home often means lower utility bills. And since maintenance services and repairs are often based on square footage, those expenses should come down as well.
  • Less work. If you choose a condo, you probably won’t be responsible for the outside of the home, which means less maintenance for you. A smaller house will still have upkeep, but it should be more manageable. And if you take the extreme step of moving to an apartment, you won’t be responsible for maintenance at all.

In some cases, downsizing isn’t worthwhile because:

  • Smaller doesn’t always mean cheaper. Apartments, townhomes, and condos (especially those with lots of amenities) aren’t necessarily less expensive. You may actually pay more per square foot, which could be okay as long as you don’t feel cramped.
  • You may have to pay extra fees. If you choose a condo or townhome, you’ll have to pay condo or homeowners association (HOA) fees. According to a study from Trulia, HOA fees have gone up, even when the housing market hasn’t. In 2015 (the most recent data available), the average HOA fee was $331 per month. And that’s not the only thing you have to worry about; you may also get hit with additional assessments. For example, if the HOA decides to make improvements to the common area, you may be required to chip in—from hundreds to thousands of dollars.
  • You may not like it. Moving can be difficult, especially if you’ve lived in the same place for years. Adjusting to a smaller space or having neighbors in such close proximity may be much harder than you anticipated. Of course, you can mitigate the risk of noise and problem neighbors by doing your homework, but there’s no guarantee.

Option 3: Move to a retirement community

Just like any other life change, becoming a retiree can take some getting used to. Without a job to go to everyday, some people feel isolated. If you’re concerned about staying social, a retirement community may be a good fit. Consider this option if you want:

  • A community of your peers. Even if you enjoy spending time with people of all ages, your peers have shared experiences that can allow you to bond.
  • Built-in social activities. Many retirement communities offer activities and events that can help you stay active and connected.
  • Housing options. You can find all types of retirement communities. There are 55+ apartments, single-family homes, townhomes, and continuing care facilities.
  • Convenience. Some retirement developments include everything you need right within the community, from grocery stores to religious services.
  • Graduated care. You may want a place that offers graduated care, where you start off living independently, then move to assisted living or nursing care if your needs change. This option can put your mind at ease if you’re worried about how you’ll cope in the future.

Retirement communities aren’t the right option for everyone. Downsides include:

  • Conveniences and amenities, including social activities, aren’t free. And facilities that include nursing care often charge a hefty fee up front in addition to monthly living expenses.
  • Some retirement communities have rules and restrictions that could be inconvenient. For example, grandkids are usually welcome for visits, but if they don’t follow rules or you’re taking care of them every day, there could be consequences. In addition, some communities have “no pet” policies or ban outdoor grilling. So remember to read the fine print, and if there are restrictions, make sure they don’t conflict with your lifestyle.

What do you want out of retirement?

Deciding where to live in retirement is more of a lifestyle choice than an investment choice. Taking the time to think through your options now can help you envision your retirement. That’s the first step to building the life you want. Currently my wife, 3 of our 4 kids, my mother-in-law, and I share a single-family home. I love my life right now, but I know it will change over time. And although it would be a big adjustment, I can picture downsizing in retirement. When I drive by the now-completed townhomes and see people going in and out, I try to picture myself living there. Change can be both sad and exciting. But I’ll admit, there’s something appealing about a shiny new building and a different lifestyle.