Personal Finance FAQ

Should I Stay or Should I Go?

Friends are the Family You Choose by Fort Worth Financial Planner Hull Financial Planning
What makes you happier? Being with born family or chosen family?

“Every dreamer knows that it is entirely possible to be homesick for a place you’ve never been to, perhaps more homesick than for familiar ground.”
–Judith Thurman

“There are things you just can’t do in life. You can’t beat the phone company, you can’t make a waiter see you until he’s ready to see you, and you can’t go home again.”
–Bill Bryson

My wife and I have friends with whom we get together every New Year’s. We rent a large VRBO house, everyone brings food and drink, and we eat ourselves into oblivion. We almost always hike in the mornings (or early afternoon, depending on how late we’ve stayed up the night before), play games in the afternoon, and gorge on someone’s home-cooked meal in the evening (Carla, I’m looking at your jambalaya). The evenings usually end with us in the hot tub, glasses of bubbles in hand until we get too overheated and trudge off to bed.

For years, we’ve bought one lottery ticket for the supermegaamazeballs jackpot. Part of the fun is talking about what we’d do with the money.

We’ve agreed that we’d split the money and that each recipient would have to buy a fabulous mansion, replete with maid, butler, cook, gardener, and pool boy, somewhere in the world. We’d all travel together, hang out in the ubermansion, and do fun things.

Recently one of our friends shared an article about four couples who have done the same thing that we’ve talked about, although there were no lottery winnings involved.

Instead, this set of friends bought a plot of land in rural Texas, built a communal building with a kitchen, living area, group activities room (read: man cave), and guest lodging space. They each built small cabins of about 350 sf2 each where they sleep and retreat for privacy.

Each of the four cabins was built for under $40,000, so my guess is that between the cabins, the common spaces, and the land, they created this “compound” for under $150,000 per family.

So, while my friends and we plot and plan our own “compounds,” one question remains:

Should We Actually Do It?

According to a recent article by Texas Tech’s Dr. Michael Finke, CFP®, only about 1% of retirees in their 60s actually move.

Instead of the fun, frolicking on the beach, playing 36 holes of golf per day and then yukking it up in the 19th hole, or reincarnating their inner Serena Williams (or John McEnroe) on the tennis court, most seniors sit around at home watching television.

I know this is what my grandmother did. My grandfather passed away when I was a plebe at West Point. They had saved and scrimped and built a nice retirement home about 6 years earlier, and they talked about traveling around the U.S. and going to Army Air Corps reunions. Instead, my grandfather’s emphysema slowed him down and he eventually succumbed to it. My grandmother was attached to the house that they had built, and she was the exact stereotype of the retiree that Dr. Finke describes in his article – she stayed at home and watched television except when she went to church or to meet with family members.

Eventually, she got to the point where she was no longer capable of taking care of the house. While she was still mentally sharp, taking care of the lawn and household maintenance had become too much of a chore for her. Furthermore, her isolation must have been crushing on her quality of life. Finally, my mom and my aunt had “the talk” with her and convinced (forced?) her to move to an assisted living community.

Immediately, my grandmother’s quality of life improved. She had a new social network, activities, and reasons to get out of her room and not watch TV. She was extremely active and was having a blast. I used to call her about once a week, and oftentimes, I’d get her answering machine several times before I could reach her. I joked that she needed a secretary so I could find out when she was going to be available to talk. She remained a very active member and very happy until Alzheimer’s debilitated her to the point that she needed specialized care and had to move away. I know my mother is very thankful that my grandmother spent several years in that senior community because those were the happiest years she had after my grandfather passed away.

The bump in quality of life after moving is very common, according to research by the Boston College Center for Retirement Research. The authors broke the people who moved into two types: shock and non-shock. As you can probably guess, the people who fell into the shock category were ones who had to move for family reasons, entry of a spouse into a nursing home, or death of a spouse, while non-shock movers were ones who moved for pre-planned reasons such as retirement, a favorable financial condition (e.g. a house that gained a significant amount of value), or a desire to upgrade their living conditions.

The authors used a broad survey of Americans which include questions about psychological well-being. Simplified, the indicators ranged from -5 (very unhappy) to 5 (very happy).

The age-long (no pun intended) notion that older people are happiest when they stay at home did not hold up in the data. People who were in the shock category and did not move saw an average decrease in happiness of 0.12 points, but people who had a shock and did move only decreased happiness by 0.04 points.

For the non-shock group, people who did not move had a 0.01 point increase in happiness, but people who moved had a 0.10 point increase.

Moving appears to have increased happiness (or reduced unhappiness) across the board by between 0.08 and 0.10 points, and it was the only statistically significant factor to improve psychological well-being for those who experienced shocks.

A lot of retirees don’t want to move because they feel like their house is a store of value in case there is a financial event. The data in the survey bore this out – people who moved after a shock saw a decrease in home equity or they gave up home ownership altogether (giving up home ownership is not necessarily a bad thing, mind you; we are happy renters!).

However, I’ll posit that there are a couple of psychological factors that inhibit people from moving and propose a few that stress the benefits of moving.

Why we don’t want to move

  • Endowment effect: The endowment effect is a psychological phenomenon that causes us to fear loss more than we like gains. The output of this bias is that it causes us to attach a higher value to our houses than what they’re really worth (see “The Endowment Effect: Why You Should Buy a Foreclosure and Never Sell to an Investor” for more). There are memories attached to the house and we are afraid of losing those memories if we move.
  • Neural pathways in our brains: We like routine. We like to do the same things over and over again. Once we find restaurants we like, meals we like, TV shows we like, we tend to do the same thing over and over again because our brain has created known paths for information to flow. Having to try something new forces us to create new neural paths, and our limbic systems resist us when we try that approach.
  • Loss of a perceived safety net: According to the previously cited study, for most retirees, the house is the second largest asset behind Social Security itself. Retirees fear tapping into that home equity to move and then needing to pay for a large bill like long term care.

Why we should move

  • Experiences are more valuable than stuff: As research from Ryan Howell, Paulina Pchelin, and Ravi Iyer shows, we get more joy out of what we do than what we have. When we move, we create new experiences, which, in the long run, makes us happier.
  • A stronger sense of connection: According to Mihaly Csikszentmihalyi, we are happier when we have connections and purpose in life. According to Dr. Finke’s research, more people are moving into active living communities, where they have things to do and people to see – reducing their loneliness and increasing their happiness.
  • A motivation to get off the couch and stop watching TV: Watching television does not engage the brain. It does not force us to think and to be active in our lives. We are fed entertainment (of a questionable value). By moving, we become more active, and by becoming more active, we become happier.

There are other factors that may drive happiness as well. I have clients who live in high cost of living areas and want to move to lower cost of living areas because they can get more for their money – geographic arbitrage. Dr. Finke has research that shows that retirees who move more than 10 miles away from their children are happier than those who live 10 miles are less away from their kids (though the kids are probably unhappy to lose the free grandparents babysitting services).

Still, to me, the argument comes down to how active and connected are you in retirement. If you’re a part of a community in which you’re already a contributor and feel that bond, then, if you can afford to live there in retirement, there may be no reason to move. However, many retirees and soon-to-be retirees create artificial justifications for not moving and wind up wiling away what should be happy years sitting in front of the television, unconnected with the society and with the others who made them happy during their working years.

Here’s a pretty interesting TED talk about mental hygiene, particularly as it relates to seniors.

For me, if we move to the “compound” with our friends, we will have a built in network of people we want to spend time with and pursue activities together. That would be reason enough for me to move.


Jason Hull, CFP®, was the co-founder of Broadtree Partners, a firm that acquires $1-5MM EBITDA companies. He also was the co-founder of open source search consultancy OpenSource Connections, a premier Solr and ElasticSearch firm. He and his wife FIREd (financial independence retire early) at 46 and 45, respectively. He has a BS from the United States Military Academy at West Point and a MBA from the University of Virginia Darden Graduate School of Business.

You can read more about him in the About Page.

2 replies on “Should I Stay or Should I Go?”

Being fellow tiny house dreamers, we have talked with close friends about setting up a similar set up. It likely will just be one of those things we like to talk about. Maybe with early retirement we have a better chance of doing something big like that than we would when we’re in our 60’s.

I do sincerely worry about isolation in retirement, whenever that comes, or simply from moving to a new place. I was honestly surprised to see the research point to additional happiness after moving, since moving inherently involves leaving whoever you were close to behind. Though I suppose you might know people where you’re moving to, my guess is that you’ll have a net loss in the number of people you know locally.

Still, maybe it’s the change itself that provides the impetus to be happy. It’s been the case with us. Every time we move to a new city, we end up loving it. We get out, explore, meet new people (out of necessity).

With the benefits of moving, seems like renting is smarter than ever.

It’s no mystery that I’m a fan of renting. Having seen both sides, I’m enamored with the magical garbage disposal fairy that comes and makes the garbage disposal work with no effort on my part.

Heck, we sort of face isolation in our working years. We both work from home and left a strong social network when we moved to Texas. I still don’t think that we’ve done a great job of creating a new social network here, nearly 3 years on. So, yes, in retirement, isolation could be a big problem.

I don’t necessarily know the whys of the move = happiness equation. I know that Dr. Finke and his team threw all of the variables in a pot and looked for statistically significant causes. I don’t know if volunteering was one of the variables in the pot already, so this may be moot; however, I’ve been reading Adam Grant’s book Give and Take, and one of the actions that he discusses that givers take (no irony intended) is volunteering. When givers volunteer, they get more energy and become refreshed from the potentially draining effects of giving.

I figure that people who move into a new area and want to become connected get involved in some sort of volunteer activity – even going to your kids’ soccer games is volunteering your time or the oranges to give at halftime. Therefore, I imagine that some retirees who move are also looking for ways to fill their time and to find meaning, so they volunteer. They get to kill two birds with one stone: they get social interactions and they are volunteering, which enervates them. Grant’s book cites statistics which show that volunteers live longer as well.

So, for retirees who do move, it seems like a reasonable suggestion to say that they should volunteer in their new community to improve their happiness, energy, and lifespan.

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