I want to piggyback on Richard's comment: "The other thing. Verify the effects of transfering your Prop 13 tax rate."
You will be happy to know there are actually THREE CA Propositions that allow transfer of tax base. In fact, there are special circumstances that not only allow some to transfer tax base TWICE, the replacement property may be 110% of the sale price (see page 2 of the linked document below).
PROP 60 provides for the transfer of a base year value from a principal residence to a replacement dwelling within the SAME County by a homeowner age 55 and over.
PROP 90 authorizes County boards of supervisors to adopt ordinances allowing base year value transfers between DIFFERENT counties. As of 2/15/10 (confirm current status before taking any action) only the following eight counties in California have an ordinance enabling intercounty base year value transfers:
Alameda, Los Angeles, SAN DIEGO, Santa Clara, El Dorado, Orange, San Mateo, Ventura
Now, generally, a person can use Prop 60 or 90 only once. However, PROP 110 provides the sole exception where a person first received relief for age and then subsequently the claimant or claimant's spouse became severely and permanently disabled and has to move because of the disability.
Prop 110's Section 74.3(b) extends Prop 60 & 90 to "... any person who has a physical disability or impairment, whether from birth or by reason of accident or disease, that results in a functional limitation as to employment or substantially limits one or more major life activities of that person, and that has been diagnosed as permanently affecting the person's ability to function, including, but not limited to, any disability or impairment that affects sight, speech, hearing, or the use of any limbs."
Whatever you do, please consult a tax/financial/estate planner before making your final decision!
You can read much more about the three propositions here: http://docs.Steven-Anthony.com/Prop60-90-110.pdf
If you are sure it is your last move you may want to consider doing a reverse mortgage. This requires no payments.
The problem with reverse mortgages is not what people think. It is the upfront governement insurance charges. So if you pass on, your kids can inherit your house, the problem is you may have quite a bit less equity. On the other hand you may not have had to draw down your retirement savings and so there probably will be more cash available. Feel free to call me and talk about it.
The problem is that most people do not understand reverse mortgages and so they make poor decissions regarding them. But if you want cash flow in your golden years, it may be just the thing.
The other thing. Verify the effects of transfering your Prop 13 tax rate. Being that you have an expensive house it may not save you any money. You need to factor in the property tax rate as it will have a huge inpact.
I would have to know more about your personal situation to make any solid recomendations, feel free to call me, No cost not obligation.