Transitioning Into a Retirement Home: The Mental Hurdle & The Psychology Behind It

Deciding to move into a retirement community is one of the most emotionally complex financial decisions a person can make. Our brains often resist even when it makes sense, whether for healthcare, social engagement, or financial stability. Change at any age is always tough, it's probably the one thing that over time never typically gets easier with practice because of the vast array of changes we face in our lifetime. Change is constant but the type of changes we experience are not. As we age change becomes even more constant. Retiring is one of the most challenging and difficult life events one experiences in their life time. Then our bodies and minds change as we age which is a very big adjustment. Considering a change of environment can feel incredibly overwhelming, especially when it requires leaving what is often times the most familiar and comfortable, your “safe place”, the one thing that has remained constant and familiar; your family home. The place you raised your children, hosted holidays and tended your gardens. Deciding between aging in place or transitioning to a retirement home is deeply personal and requires delicate time to adjust to even the consideration of the idea.

As advisors, this topic of conversation for us is only partially about the numbers. We spend more time counselling our clients on the idea, well before they might even be considering it. Planning for the “what if” scenarios is our job, which often means pushing the numbers to the side and spending a great deal of time talking about the soft issues before we tackle the financial part of this transaction. The reality is, for many people their home is their biggest financial asset, the part of the equation that requires us to determine affordability of a retirement home is offset by the sale of the house, so money is rarely the issue.

Here are some psychological barriers we acknowledge our clients are experiencing when making this decision and tips we provide for combating them.

Psychological Barrier #1: Endowment Mindset

The endowment mindset explores the value we place on sentimentality; we place a greater value on things that we own and are familiar with. Your home is just a structure but to you; it’s where you raised a family, built memories and created a sanctuary. The emotional attachment we place makes it very hard to let go, even when moving might improve your quality of life.

Ownership creates an inflated sense of value. I’m sure Real Estate agents experience this very often with clients when trying to place a value on the list price for their clients. You can’t put a price on sentimental value, that value is invaluable.

When applied to housing, this mindset means retirees often resist selling their homes, even when upkeep is burdensome, costs are high, and healthcare access and safety are growing concerns.

Tips to Face the Endowment Mindset

Reframing: Instead of focusing on what you’re losing, focus on what you’re gaining: less maintenance, more convenience, built-in healthcare, a vibrant social environment, extra money available to travel, early gifting is now possible. The pros often always outweigh the cons, we just have to reframe.
Trial stay: Many retirement communities offer trial visits. Experiencing life in a new setting can reduce the feeling of loss by showcasing what’s possible before you fully commit and/or sell your home. This can be incredibly helpful as there is such a stigma attached to retirement communities and what they are really like.
Financial modeling: For our clients, we build hypothetical scenarios with our planning software that illustrate several different scenarios. Quantifying the net proceeds from selling your home, the new monthly and annual costs of the community you are considering, and any required healthcare costs you may have. Comparing this to a hypothetical scenario where you stay in your current home but pay out of pocket for healthcare providers to come to you.

Psychological Barrier #2: Representativeness Bias

The representativeness heuristic/bias is an automatic mental shortcut we use to make assumptions through stereotyping. Our tendency to judge based on how much something seems to fit a mental stereotype rather than reality.

A classic example of the representativeness bias involves judging someone's profession based on how well they seem to match a stereotype. For instance, if you see someone dressed in eccentric clothes and reading a poetry book, you might be more likely to assume they are a poet rather than an accountant, even if there's no actual basis for that assumption says Wikipedia. This is because you're comparing the person's characteristics to your preconceived idea of a "poet"

The same bias affects how we think about retirement communities. Many people picture dark hospital like hallways, isolation and sick people. But retirement communities are often lively & social, full of amenities. Some outfitted with bar’s, happy hour and live music, weekly entertainment & social clubs. The social elements of this type of living combined with the convenience of not having the care for the maintenance of your home or worry about grocery shopping and cooking can give you even more quality of life rather than taking from it. Letting outdated stereotypes drive decisions can lead to missed opportunities for a better lifestyle.

Tips to Avoid Representativeness Bias

Visit in person: Schedule a site visit at multiple communities in your local area. Seeing the environment firsthand can replace outdated mental images with reality.
Chat with current residents: People already living in a retirement community can provide a more accurate perspective on daily life. People LOVE to chat about their experiences, you will get honest feedback from anyone living there if you ask around. Typically, there is a un official “resident advisor” the go-to “tour guide” who is happy to show you around the place from a resident’s perspective.

Psychological Barrier #3: Projection Bias

Projection Bias creates a thought process where we tend to assume our future selves will be similar to our current selves, which can lead to short-sighted decision-making. Causing thoughts such as:

‘I’m independent now, so I won’t need assisted living later.'
‘I don’t need these services yet, so I won’t need them in the future.’
‘I feel comfortable in my home today, so I will always prefer staying here.’

This also overlaps with status quo thinking, which makes us resistant to change, even when it could be for the better. People delay moving to a retirement community because they assume the discomfort of change outweighs the benefits of planning ahead.

Tips for Projections

Make a proactive decision, not a reactive one: Instead of waiting for a crisis, consider moving while you still have control over the decision and can explore all available options. Even something as simple as getting on a waiting list, which could be several years, is a good way to give yourself the future option without committing to the move today.

Talk to your future self: Ask yourself,
- ‘If my health changes tomorrow, would I be prepared?
- “Will my financial plan be safe, if I choose not to participate in a retirement community but still need advanced healthcare?"

If you believe your children can provide your future caregiving, have an honest conversation with them about whether this is feasible given their other family and career responsibilities.

Moving into a retirement community isn’t just a financial decision; it’s an emotional one, and it’s a big one. By recognizing these natural thinking patterns, you can make a proactive choice that aligns with your future well-being rather than being forced into a rushed decision later.