Buy Now Retire Later As baby boomers move through mid-life, they're migrating--right now--to the towns where they'll retire. Why wait?
By Marion Asnes

(MONEY Magazine) – Barbara Dempsey played the retirement real estate game and won: She just purchased an oceanfront condo in Florida with three balconies looking out over the beach, using profits from the sale of a small nearby condo that she bought 10 years ago. Both places are in Boca Raton, close to Dempsey's son and his family and a 20-minute flight away from her mother, who lives near Tampa.

At the same time, the 55-year-old retired attorney maintains her hometown base in Manasquan, N.J., where she does occasional consulting and enjoys a life rich with friends and creative pursuits (right now she's renovating). From January through March--when, she says, "New Jersey is no fun"--she's a snowbird, setting off to her sun-drenched winter getaway. And should she decide to move to Boca, her new condo is spacious enough for her to live in full time and to entertain visitors, including her 23-month-old grandson.

"When my late husband and I bought our first apartment in Boca Raton," Dempsey says, "we settled for a small, inexpensive but very lovely condo on a golf course, one mile from the ocean, because we thought we'd use it only about four weeks a year. My son was living nearby in Miami Beach. Now I'm talking about retirement with a capital R, and for me that required an ocean view."

These days, many 40-year-olds are already thinking about how and where they want to live when they are no longer working full time. According to a recent online poll of MONEY subscribers, the No. 1 retirement housing choice of the baby-boom generation is staying home, which experts call "aging in place." The second most popular option: relocating to be near adult children. Dempsey's choice--shuttling between two homes, with one in a warm, sunny location close to family--offers the best of both worlds.

Whatever decision you make about your retirement lifestyle, most likely you'll have lots of company. Every eight seconds, a boomer turns 50; the oldest members of the cohort are 58. So if you're thinking about retiring in a new home--whether it's your only base or one of two--now's the time to find it. "There's a concern that the prices of properties most desired by boomers may get out of reach," says David Hehman, CEO of, a San Francisco realty firm specializing in second homes. Why? "The negative legacy of a large generation is that it creates its own inflation," explains economist Richard F. Hokenson. "Unless you were born at the very beginning of the baby boom, you are always colliding with people who want to do the same thing as you--whether it's buying a house or sending kids to college." Our advice: Buy now, retire later.

Jump-starting the good life

A distinguishing trait of boomers--those of us born between 1946 and 1964--is that we haven't held back from experiencing the good life while raising our families and building our careers. And our ideas about how to spend retirement may not be that different from the life we're already living. I'm planning on staying put, like most people in their late forties. My vision of a great retirement is puttering in my garden, raising tomatoes and grandchildren, writing a novel, traveling the world. You may want to perfect your tennis serve, volunteer at a museum or teach kids to read. But chances are, whatever we see ourselves doing in the future is more a continuation of what we're doing now than a radical break.

Those baby boomers who don't intend to stay put are moving early, reports William H. Frey, a demographer with the Brookings Institution, based on his studies of the U.S. Census. One factor driving this advance planning is that the majority of boomers think they will keep working, at least part time. According to the 2002 Americans and Their Money survey, just 28% of affluent Americans say that they want to "retire completely." Most boomers will retire without the benefit of a guaranteed pension, and the stock market has not been as kind to their assets as they had hoped. So even after age 65, they will need to stay close to their professional networks. If they are going to relocate, they have to do so in time to build a new set of contacts. What's more, Frey observes, "one spouse may want to retire and the other may want to keep a business."

The hot spots

Like other age groups, boomers who do move are heading south and west. The new boomer zones: suburbs and exurbs of cosmopolitan cities like San Francisco and Miami. Those who are priced out of such bubbling real estate markets are moving to Nevada, Arizona, the Carolinas, Georgia and northern Florida. These areas share a warm climate, an exhaustive range of outdoor and cultural activities targeted to well-educated residents, and growing economies where professionals can find work.

Beaches and golf courses aren't the only locales that beckon. "Second-home buyers are looking for walking trails, biking trails, activities more typical of this generation," says John Clifford, vice president of marketing for Centex Destination Homes. A home in a neighborhood that offers these amenities is likely to keep its value if you eventually decide to sell.

Making the numbers work

So, can you afford a beachfront condo--or, say, a Victorian in the San Francisco Bay Area, if that's more your style? Tally mortgage and tax expenses, then add upkeep, such as condo maintenance fees, landscaping, golf club fees. Also compare the cost of living in the area with where you live today. If you're looking at a second home, add in the cost of setting up and maintaining a new household, from furniture and appliances to a second set of utilities and taxes. You may even need to purchase a separate wardrobe to keep there.

When house hunting, don't worry about finding your dream home right away. Like Barbara Dempsey, you can always trade up later, says Nathan Booth, senior adviser for the Senior Real Estate Specialist Council, an international group that certifies real estate agents with special skills for working with older buyers. If you have benefited from the real estate boom in your first home, you can easily put your equity to work in a second. Or you can trade down to a smaller home.

If you're buying a second home now--especially one that you will use only occasionally until you retire--consider buying a property that you can rent out when you're not there. CEO Hehman says more second-home buyers are looking for rental income: "Buyers want to see a property's rental history." Success at renting requires pulling together a lot of details, which may make it worthwhile to hire a property manager. Check the going rates in your area; they can range from 10% to 50% of rental income.

On the margins of these pages, we've written up seven cities whose metro areas are popular with pre-retirees and retirees alike. "Match your destination to your lifestyle, then sharpen the pencil and make sure your choice makes economic sense for the long run," Hehman says.

Here's a quick list of questions you should ask yourself before settling on any destination.

COMMUNITY. What type of neighbors do you want? Are you craving cocktail-party chatter about the latest hot restaurant? Or would you rather discuss what everyone's grandchildren are up to? Do you want to attend classes or lectures at a local college? If you're in a resort area, does the town roll up its sidewalks when the season is over?

EASE OF TRAVEL. Would you like to be near a hub airport with several airlines to choose from and lots of nonstop flights? Or within an easy drive of family and old friends?

ACCESS TO WORK. If you want or need to keep working, is the local economy thriving? Do the businesses where you plan to live value older workers? Do you prefer driving or taking public transportation to work? Is telecommuting a possibility?

MEDICAL CARE. Are there teaching hospitals and a healthy representation of specialists close by? Does your health plan offer a choice of in-network doctors and health facilities in the area? If not, your selections may be limited, or you may need to consider alternative insurance.

SAFETY. This is especially important if you plan to travel for long periods or if you're a night-life aficionado.

There is no single answer to retirement. The important thing is to think now about where you want to go--and align your finances and housing accordingly. Waiting until tomorrow could get expensive. Just ask a boomer.