Where should you live after retirement?

The best place for you to retire depends on a number of personal factors that are most likely unique to you -- ones that don't necessarily show up in popular stories in the media on the best places to retire.

The upshot? When it comes to determine where you'll live after in retirement, you'll want to follow your own compass, concludes a recent report prepared by Merrill Lynch and Age Wave, a think tank focused on aging.

The report identified age 61 as the "freedom threshold" -- the age when people are more likely to be free to choose where they live and not be constrained by family or work responsibilities. Almost two-thirds of retirees surveyed reported that they've moved or will move in their retirement years. The top three reasons for moving:

  • Wanting to be closer to family (29 percent)
  • Reduce living expenses (26 percent)
  • Change in health status (17 percent)

Among retirees who had moved, surprisingly, only about half (51 percent) downsized, meaning that almost half either moved to a home that was the same size as their current home or one that was even larger. Predictably, retirees who downsized did so to reduce their living expenses and/or reduce the hassle of maintaining a large home. Retirees who upsized wanted more room for family and friends to visit or even live with them.

Roughly one-third of retirees reported that they don't intend to move during retirement, according to Merill Lynch/Age Wave. The top three reasons cited for this were:

  • I love my home (54 percent)
  • Family is close by (48 percent)
  • I don't want to lose independence (44 percent)

Perhaps one of the most interesting results from the Merrill Lynch/Age Wave report was the relative importance of the home as a financial or emotional investment. Younger respondents typically reported that the financial value of their home was more important than the emotional value, whereas the reverse was true for older people. Among those age 65 to 74, 56 percent reported that the emotional value of their home was more important than their home's monetary value, and this percentage was even higher for those age 75 and older.

Following this theme, retirees are far more likely to want to feel connected to their neighbors and community; this factor was important for 74 percent of people age 65 and over but only for 50 percent of people under age 35.

Another surprise was that retirees are most likely to report that they prefer to live in a diverse community of all ages, belying the myth that retirees prefer to spend time largely with people their own age. Just over two-thirds (67 percent) of retirees age 65 and over prefer a diverse community, while this factor was important for only slightly more than half (53 percent) of people under age 35.

Compared to people who haven't yet retired, retirees are more likely to say their homes are comfortable, safe and a good place to accommodate family visits. Pleasant weather, often cited as an important factor by the "best places to retire" stories, came in fourth in importance.

For many people, it seems, the best place to retire is where the heart is.

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.