Should we move to California in our 70s—and take on a bigger mortgage—to be near our kids?
For many couples in their 70s, this is the most personal financial decision of retirement. It blends money, health, family, and identity. There isn’t one right answer, but there is a right process. Here’s a practical way to think it through.
Start with why
– What do you hope to gain? Day-to-day time with grandchildren, help as you age, a new climate, or a fresh start?
– How long do you expect to live there? Five years, 10+, or “as long as we can” calls for different housing choices.
– How settled are your kids? Are their jobs and schools likely to keep them in the same metro area?
What a bigger mortgage means in your 70s
– You can qualify. Lenders can use Social Security, pensions, annuities, Required Minimum Distributions, and even “asset depletion” methods. Age itself can’t be used against you.
– But a larger fixed payment raises risk. If markets fall and you draw from investments to pay the loan, you face sequence-of-returns risk. If one of you dies, the survivor must still afford the payment.
– Guardrails to consider:
– Keep total fixed housing costs (mortgage, property tax, insurance, HOA) under about 25–30% of your guaranteed income (Social Security, pensions, annuities).
– Hold 1–2 years of housing payments in safe reserves, separate from your emergency fund.
– Stress test: Could the survivor afford the home on the lower of your two Social Security checks plus any survivor pension?
– Mortgage structure:
– A 30-year fixed minimizes payment and preserves cash flow, which matters more than paying off fast at this stage.
– Avoid ARMs unless you have an exit plan; uncertainty is the enemy in your 70s.
– If most of your wealth is in your home and you want no monthly payment, explore a HECM reverse mortgage for purchase. You make a substantial down payment and have no required mortgage payments (you still pay taxes, insurance, and upkeep), gaining cash-flow flexibility.
– Insurance backstops:
– Consider whether a portion of your portfolio or an annuity is earmarked to cover housing if markets slump.
– Traditional mortgage-protection life insurance is often costly in your 70s; run the numbers carefully.
What makes California different
– Housing and insurance costs:
– Property taxes are roughly 1% of assessed value statewide, plus local assessments; some neighborhoods add Mello-Roos or special district fees.
– If you’re moving from another state, you generally cannot bring your old property tax assessment with you; your new tax bill will be based on the California purchase price.
– Homeowners insurance can be costly or hard to obtain in wildfire-prone areas; you may be steered to the state FAIR Plan plus a wrap policy. Earthquake insurance is separate and has high deductibles.
– State income taxes:
– California does not tax Social Security benefits, but it does tax most other retirement income. If you’re moving from a low- or no-tax state, model the after-tax hit.
– SALT deductions remain capped for federal taxes, limiting the write-off for property and state income taxes.
– Health care and aging:
– Provider networks vary. If you’re on Medicare Advantage, moving triggers a Special Enrollment Period; make sure comparable plans and doctors are available. If you have Medigap, California’s “birthday rule” can make switching plans easier once a year—confirm the current window and rules.
– Long-term care is expensive: in-home care and assisted living costs are high relative to most states. Plan how you would fund increasing care needs.
– Climate risks and practicalities:
– Wildfire smoke days, heat, and drought restrictions are real in some regions. On the flip side, many areas offer year-round outdoor living and strong senior services.
Alternatives to “buy a bigger house with a bigger mortgage”
– Rent first for 6–12 months near your kids. You’ll learn neighborhoods, test the climate, and see whether daily proximity feels right without locking in.
– Buy smaller or differently. Single-level condo or townhome, 55+ community, or a place that’s accessible and easy to maintain.
– Co-locate creatively. Build or live in an Accessory Dwelling Unit (ADU) on your kids’ property, or buy a home with an ADU. California’s ADU rules are favorable, though building costs and timelines vary.
– Keep your current home and split time. Extended stays or furnished rentals near your kids might cost less than a big new mortgage.
– Use a reverse mortgage for purchase. Larger down payment, no monthly mortgage payments, and you stay liquid for health and lifestyle needs.
Family conversations you must have
– How close is close enough? Ten-minute drive, same neighborhood, or the same roof?
– Expectations. Will you provide regular childcare? Should you expect hands-on help if one of you needs care? Clarify boundaries so love doesn’t become obligation.
– How settled are they? Ask candidly about their two- to five-year plans.
A decision framework you can use
Give a green light if most of these are true:
– Finances
– All-in housing costs fit under 25–30% of guaranteed income.
– You can keep 12–24 months of housing costs in safe reserves after closing.
– Your withdrawal rate, including the new housing costs, stays at a sustainable level for your portfolio.
– The survivor can afford the home on survivor benefits plus a prudent draw.
– Home
– One-level living or elevator access, no-step entry, wide doors, and a bathroom that can be adapted for mobility.
– Insurable at a reasonable cost; wildfire and earthquake risks understood and priced in.
– Walkability to essentials or reliable transit/ride services.
– Life
– You can name two or three ways you’ll build a new social circle besides family.
– You’ve identified nearby doctors, hospital, and preferred Medicare plans.
– There’s an exit plan if health or finances change.
Run the numbers quickly
1) Calculate your guaranteed income
– Social Security (both): $X
– Pension/annuities: $Y
– Total guaranteed: $G
2) Set a housing budget
– Target 25–30% of G for mortgage + property tax + insurance + HOA.
– Example: If G = $8,000/month, target housing costs of about $2,000–$2,400/month.
3) Estimate California housing costs
– Mortgage payment at today’s rates on your expected loan amount.
– Property tax: assume roughly 1.1–1.3% of purchase price per year divided by 12.
– Insurance: get quotes early, especially if near the wildland–urban interface.
– HOA or Mello-Roos if applicable.
– Compare the total to your target and stress-test at +15% for surprises.
4) Portfolio stress test
– Could you cover two years of housing from cash/bonds if markets drop 25%?
– After the move, is your planned draw still in your comfort zone?
5) Travel comparison
– Price out the cost of visiting your kids from your current home 4–6 times a year. If the annual travel budget is far lower than the added annual housing cost in California, that’s a data point.
Special notes on selling and taxes
– If you sell your current primary home, up to $500,000 of gain may be excluded for a married couple if you meet the use and ownership tests. Gains above that are taxable, and California taxes capital gains as ordinary income.
– Estate and property rules are nuanced. If you have substantial assets or complex titling, consult an estate attorney familiar with California community property and property tax rules before you buy.
Who to put on your team
– A fee-only CFP professional to model cash flow, taxes, and sequence risk.
– A CPA to map federal and California taxes and the home-sale exclusion.
– An elder-law or estate attorney to align titling, trusts, and California rules.
– A mortgage advisor who works with retirees and, if relevant, reverse mortgages.
– A local real estate agent with the Seniors Real Estate Specialist (SRES) designation.
– An independent insurance broker for homeowners, wildfire, and earthquake coverage.
Bottom line
Move for the life you want, not just the house you can qualify for. If being near your kids will measurably improve your daily life, and the numbers work with buffers for health and market shocks, California can be a wonderful place to spend these years. But don’t let a big, inflexible mortgage crowd out the two things retirement needs most: cash-flow flexibility and options if life changes.
If you’re unsure, rent first, refine your budget with real quotes, and revisit the decision in a year. The goal isn’t just to be closer—it’s to be closer and secure.
