So much for the conventional wisdom of downsizing your home when you retire. A huge percentage of families are moving into bigger homes -- many to make room for adult children who didn't fare so well during the recent recession. So while their friends might still be looking at downsizing as the best financial option, this new crop of home owners are instead going bigger, moving into their dream home -- or at least keeping the same size home.
A recent survey from Merrill Lynch showed that 49 percent of retirees didn't downsize, and up to 30 percent moved into larger homes.
Granted, the survey of nearly 6,000 people included about 39 percent who had investable assets of $250,000 or more, but it shows that not everyone is thinking a smaller home in retirement.
"It's amazing," says Christian Boyd, a managing director and senior financial advisor with Merrill Lynch. "You think of people downsizing, but that's not really the reality, especially for a lot of my clients."
Some 33 percent say in the survey they wanted a larger home to make family members more comfortable. Boyd knows many in this situation. One of her clients recently moved into a home equally as large as their previous home, but it had a different configuration. That was to allow their daughter, son-in-law, and three grandchildren to live with them.
"Part of it is because of the recently economic downturn - their daughter's business was hit pretty hard," Boyd says. "On the flip side, it allows for them to not have to hire extra care because they're all living under one roof. They don't have to afford to help their daughter live in a separate home with their children."
It's all part of the boomerang effect happening in the nation, with one in six adult children moving back in with their parents, Boyd says of the survey. The idea of multigenerational families living together, seen in many other countries, is becoming more prevalent in the U.S., having doubled between 1980 and 2010 to 22 percent, she says. Some 20 percent of those surveyed say they went larger so a family member could live with them.
"That's significant and something we need to pay closer attention to," Boyd says.
She had another client that moved into a slightly larger home that had a different configuration. Instead of having the five bedrooms they used when raising their four children, they wanted some bedrooms with large bunkroom for their grandkids. The other bedrooms were for their children or friends to come visit from out of state. They also wanted to have two home offices for both the husband and wife who have retired and don't have their corporate office.
"It doesn't surprise me that people are becoming more family oriented than ever before," Boyd says. "My clients sometimes wish they had a little more time with their kids and think that now is their chance to have all this time with their grandchildren."
Because many of her clients are in the high net-worth category, they have more flexibility than others. That may include upsizing for some or even buying more properties for their families.
"I think these trends will continue," Boyd says. "Part of it is the stock market and people feeling more comfortable."
Boyd mentions one client who recently married at 74 and decided to keep his large lake home in northern Minnesota. He then bought a large home in the Twin Cities for grandchildren to stay overnight and for children who live out of state to visit him. It also allows him to have a home office since he doesn't go to his corporate office anymore. The client also bought a third place in Florida as a gathering spot for family members -- particularly children and grandchildren to meet and spend more time together.
"For many of my clients, they want their retirement to be their grandchildren," Boyd says. "Whether they're flying to visit or buying a place near a child that doesn't live here or creating a bigger space for them to visit more often, that's the ultimate goal or one of their large goals."
It shows one of the trends to watch in the housing market. During the next decade, the number of age 65+ households in the U.S. will increase by nearly 11 million, while growth in the number of households across all other age groups will be less than 2 million, according to Merrill Lynch. This growth among older households is driven by demographic forces, including the massive baby boomer generation now moving into their retirement years and increasing longevity leading to longer retirements, analysts say.
Retirees seem to be happy. The survey showed that 65 percent say they're living in the best homes of their lives. Some 64 percent say they're likely to move once in retirement, with 37 percent having moved and 27 percent saying they're planning to do so, Boyd says.
"They think of this as a third act," Boyd says. "With people living so much longer than we used to, they're looking out 20 years. They realize it could be 30 years or five years before they need some assistance. They don't feel any different than they did 20 years ago. They're very sharp and feel like they're in very good health."