Moving to a Cheaper City Can Net You an Extra $100,000 in Retirement

As Americans approach the age of retirement, they naturally start thinking about where they want to enjoy their golden years — perhaps somewhere that’s warm and quiet.

But relocation can also have a huge impact on your retirement planning: A new study shows that for the many older Americans who have significant equity in a home, selling and moving to a less expensive market can pay off in a big way, to the tune of hundreds of thousands of dollars.

Even though home equity is the “most prevalent and often most significant source of wealth for American households,” unlocking it is frequently overlooked in retirement planning, according to a new paper by experts at Vanguard.

By moving to a market with less expensive homes, the typical older American could net $100,000 or more that could help fund their retirement. And in areas of the country where housing prices are much less expensive, the cost of living is usually lower, so the cash you’d get from moving to a more affordable home will likely go further.

Credit Repair companies improve your credit so you can apply for a mortgage

Bad credit can weigh you down. Find out what credit repair can offer you by clicking on your state.

View Plans

What the research says

When Americans 60 and older relocate, about 60% of them go somewhere with cheaper homes, the authors’ analysis of 2019 U.S. Census data shows.

• Among those moving to more affordable housing markets, the typical person “extracts” about $100,000 of home equity. People moving out of particularly expensive cities can get much more when they relocate.

• The study gives an example of a 65-year-old resident of Santa Clara, California, selling the average-priced home in the county and buying an average-priced home in Merced County, which is nearby but outside the Bay Area. That swap would net about $330,000 that could be put toward retirement, assuming no mortgages are involved.

Bottom line

The strategy described in the paper, “retire and relocate,” won’t be right for everyone. But if there’s a more affordable market where you’d like to live during your post-work years, selling your home and moving could make it easier to retire earlier or more comfortably.

Retire with Money

Retire With Money brings the latest retirement news, insights, and advice to your inbox. Jill Cornfield has covered retirement for more than 10 years.

Sign Up

More from Money:

9 Best Home Equity Loans of 2023

For Retirees, Downsizing to a Smaller Home Isn’t the Cash Grab It Once Was

How Long Does Retirement Last? Many Americans Don’t Know

© Copyright 2023 Money Group, LLC. All Rights Reserved.
This article originally appeared on Money.com and may contain affiliate links for which Money receives compensation. Opinions expressed in this article are the author’s alone, not those of a third-party entity, and have not been reviewed, approved, or otherwise endorsed. Offers may be subject to change without notice. For more information, read Money’s full disclaimer.