The Upside of Changing Horses (Or Houses)If you are in your 50s or early 60s, you’re in the Peril Period. And the Worst of All Possible Worlds appears to be happening. Everything--- home value, 401(k) and job--- is going down the drain just as you’re getting really serious about retirement.

How would you like to restore your long-suffering retirement savings in a single step?

Well, it’s possible. Maybe, just maybe, the collapse of housing prices is an opportunity.

How do you turn disaster into opportunity? You move from a high-cost area to a lower-cost area. You move from a somewhat-depreciated area to a much-depreciated area. You move from an area of discomfort to an area of distress.

Let’s see what can happen if you can accept disappointment in the sale of one house but buy another at a bargain price. Can you use the difference to restore a shattered retirement? Some back-of-the-envelope figures indicate that you can.

Let’s imagine George and Gina Mover. They’re about 60. They live in New England. They had hoped to retire soon.

But then the housing crisis came along. It took 7 to 20 percent off the value of their house.

Then, the financial crisis came along. It took at least 25 percent off the value of their retirement savings accounts.

Finally, the recession came along. It may take their jobs. This would force them to retire.

Query: How do they turn all these lemons into lemonade?

Answer: They make the traditional retirement move to a warmer climate.

If they owned a median-priced house in the Boston area, for instance, it was worth about $400,000 in 2006 but is only worth $336,000 now. But if they are among the many homeowners over 50 who have no mortgage, they can sell the house and move to any number of places where the median home price is lower. Then they can add the liberated home equity to their retirement portfolio.

Anyone who lives in a relatively high-priced area can do this.

Some readers will be shocked by the idea that many 50-plus households have no mortgage, but the data comes from a recent study done by the AARP Public Policy Institute.

If the Movers went to Miami, where the median home price has declined from $371,000 to $234,000, they could add $101,000 to their nest egg.

They could liberate still more by moving to Orlando, where the median home price has fallen from $270,000 to $175,000. This would liberate $169,000 for investment.

Or they could move to the struggling Cape Coral-Fort Myers area, where home prices have plummeted from $268,000 to $111,000. That would allow them to add a hefty $224,000 to their retirement nest egg.

What if the Movers don’t like Florida?

No problem. They can move to Las Vegas, one of the most distressed housing markets in America. Buy a median-priced home there for $182,000, and they’ll add $154,000 to their nest egg. In fact, they don’t even have to move to a distressed area. According to National Association of Realtors figures, the Austin-Round Rock area in Texas has actually appreciated since 2006. So it isn’t considered distressed--- even though it has an abundant supply of builder closeouts, other bargain deals and a growing number of short sales. If the Movers buy a median-priced $185,000 home there, they’ll be able to add $151,000 to their nest egg.

Start playing with the possibilities for a move--- city, state, possible changes in home size, or moving to a no-income-tax state such as Florida, Nevada or Texas--- and geographic arbitrage starts to look like a positive plan. Cut your expenses and increase your savings in a bum market.

Will liberating home equity restore the retirement nest eggs of older workers?

It’s very likely. Only a minority of older workers have ever had more than $400,000 in their retirement savings plans. The moves discussed here could restore nest egg losses ranging from 25 percent to 50 percent.

Is moving easy? No. It’s a major hassle.

But it’s an action you can take. The prime mover will be George and Gina Mover. It won’t be the economy. It won’t be the government.

George and Gina are a much better bet than those other two.

Restore Your Nest Egg by Moving

This table illustrates the potential equity liberated by selling an un-mortgaged home at the median price in Boston and buying an un-mortgaged median-priced home in a sample of areas around the country where home prices have suffered major declines or are significantly lower. Home prices in Austin, for instance, have actually risen slightly over the period considered. The figures don’t include selling, purchase or moving costs.

Area Median Home Price Equity to Add to Nest Egg
Moving from Boston to: $336,000 $0 because you didn’t move
---Cape Coral, Fort Meyers FL $111,000 $224,000
---Palm City, Melbourne, Titusville FL $124,000 $212,000
---San Antonio TX $143,000 $192,000
---Tampa, St. Petersburg, Clearwater FL $151,000 $185,000
---Phoenix, Mesa, Scottsdale AZ $156,000 $180,000
---Orlando FL $176,000 $160,000
---Las Vegas, Paradise NV $182,000 $154,000
---Austin, Round Rock TX $185,000 $151,000
---Tucson AZ $186,000 $150,000
---Miami FL $234,000 $102,000
Data source: http://www.realtor.org/research/research/metroprice