What to do when your retired clients decide to move

Managing the financial realities of a move

Even downsizing can come with something of a financial reckoning. Riddell acknowledges that many clients are surprised that once they’ve selected the new property to move into and renovated it to their liking, they’re left with less equity from their prior home than they expected. Transaction costs, moving costs, and any renovation costs all start to add up. Riddell tries to prepare clients for those realities so that they don’t expect an unrealistic amount of cash out of their past home.

Those same issues can arise when clients want to move cross-country for family, in addition to a host of other possible challenges. Often the clients’ children might be building their lives and careers in big cities with expensive real estate markets relative to where the clients had retired. That might mean moving into a condo, which comes with a host of property taxes, condo fees, and other maintenance costs that can come at a retiree unexpectedly.

Because of the relatively short time period when grandchildren want to be in the mix with their family at all times, Riddell notes that some retirees will choose to maintain their existing home while purchasing a condo or small property closer to the grandkids and moving back to their main home as the grandkids get more independent. Those situations can be advantageous from a lifestyle standpoint, but come with some trade-offs and may require the client to take on a mortgage or significantly concentrate their portfolio.

Taking on a mortgage in retirement is both risky and works contrary to the goals of retirement income planning. A well-planned retirement income should minimize tax paid by the retiree, which means they have less income through which to qualify for a mortgage. In those situations Riddell will advise working with specialist mortgage brokers to manage that. He also has to have the wider conversation about trade-offs between taking on debt and keeping more of the portfolio invested, or liquidating more of the portfolio to buy a home with cash. That decision, he says, is so specific to each client situation that no hard rules should be applied to it.

Preparing clients for the emotion of moving

Moving is a deeply emotional decision. Even downsizing can mean giving up a house full of memories, love, and routines that shaped how people interact with the wider world and each-other. When that move also includes a full-blown relocation, the emotional weight can become unbearable.