Another option is to move out of the house and rent it to tenants. Younger seniors sometimes rent out their home because they want to move, but aren't willing to sell the property at what they perceive to be a depressed market value. Older seniors more often choose the rental option as a short-term transition when they move to a long-term care facility.

"Frequently, they have, in their mind, the potential of moving back to their home if they don't like it," Tharp says. "But more often than not, they get settled in, meet people and get involved in the activities and they like it and go ahead and sell the house."

Being a landlord entails some risks and headaches, but Tharp says a property management firm or the rental division of a realty brokerage company can help find tenants, collect rent and handle repairs and maintenance.