Think through the financial details before choosing a location
for retirement.
WHEN YOU’RE GETTING ready
to retire, there are many decisions to make. One of the biggest choices
involves where to live.
Whether you stay at home or move to a new place, there are financial and
lifestyle factors to consider.
Here
are some of the common housing options for retirees, along with the advantages
and disadvantages of each living arrangement.
Staying at Home
Most
people age 50 and older (77 percent) want to stay where they are as long as
possible, according to the 2018 Home and Community Preferences survey by AARP.
“Retirees that want to stay at home can find that this is totally plausible,”
says Lisa Odoski, a financial planner at TFG Wealth Management in Newtown,
Pennsylvania. If you’re comfortable at home, involved in your current
neighborhood activities or regularly host dinners, remaining at your current
home might be a good fit.
If
finances are tight during retirement, it can be useful to look at your home’s
equity. If much of your wealth is wrapped up in the equity of your home, you
might consider selling it and moving to a less expensive
place. If you decide to stay, you’ll need to factor in costs to
maintain the house and pay off the mortgage if you haven’t yet.
Your
home may need changes to accommodate health needs as you age. You might have to
make expensive home renovations to
put in a ground floor bedroom or change the shower design to make it more
accessible. If you need help for daily activities, you may have to bring in
family members or a nurse. When relatives offer to help, be aware that a strain
could develop. “This takes a toll on the family, and the retiree may not be
receiving the best resources,” Odoski says.
Retirement Community
Rather
than staying at home, you might opt for an active adult community, assisted
living facility or continuing care retirement community. “Each offers benefits
to retirees to assist with living, although it is important to consider each
option based on the retiree’s current health,” Odoski says. You might choose a
place where you can live independently but have the option of more care later.
Many
retirement communities offer amenities like a pool, gym, fitness classes, craft
activities and social events. You’ll also find services like lawn care, home
maintenance and food preparation available in most places.
Always
check the fine print associated with a move to a retirement community. Many
facilities ask you to make an upfront payment and then ongoing monthly
installments. The costs can add up quickly. “Always check out the possibility
of any federal, VA or state assistance,” says Thomesa Lydon, owner of Lydon
Senior Pathways in Scottsdale, Arizona. If you’re not sure what’s available,
head to a local Agency on Aging for information.
After
some research, you may find the price is simply too high. Even if you can
afford to move, be aware that you’ll give up certain freedoms. If you like to
do your own landscaping, for instance, you might not be able to keep a personal
garden at the new place. Also keep in mind that what you see in a brochure or
online may not be a completely accurate picture. “Be sure to visit and eat a
meal at any community of interest because you will be eating that food
regularly should you move in,” Lydon says.
Move to a Condo
If you
want to live in a location that’s close to restaurants, theaters and shopping,
a condo might be a good fit. Many condos are located within walking distance of
entertainment. You also might get amenities like pool access, yard maintenance
and house upkeep. If you currently live in a large home, you might find a
smaller space more manageable.
Read
the rules carefully before making a move, as condos usually require you to pay
dues. If the costs are steep, you might overextend your budget. Also consider
the overall cost of living. If you currently live in a place with low taxes,
look at the prices you’ll pay in the new place. Higher prices for gas, food and
taxes could add up fast.
Live With Family Members
If you
have a close relationship with a child or relative, you might consider living
with them. “Moving in with a family member can be an excellent economic
decision,” says Dawn Perry, senior vice president of marketing at ERA Real
Estate in Sparta, New Jersey. You’ll save the cost involved with owning or
renting a space of your own. You’ll also reap the benefits of companionship and
help with activities like shopping and cleaning.
However,
be aware that tight living quarters can
be a drawback. “If the family has limited space within their home, taking in a
new guest can be strenuous and make the home feel cramped,” Perry says.
Renting
If
you’re considering moving to a new city or state, it's wise to rent in the new location.
You’ll have a chance to explore the area before making any commitment. And if
your current home is a burden to keep up, renting could be a smart choice. “If
you rent, you won’t be responsible for maintenance like lawn care and snow
removal,” says Tony Drake, a financial planner and founder of Drake &
Associates in Waukesha, Wisconsin. “That could save your back and save you at
the bank.” You’ll also have predictable housing costs, as you won’t be
responsible for most repairs.
However,
renting in an urban area with a rising cost of living could bring unexpected
financial surprises. You could find the rent climbs after
a year and reaches an amount you can no longer afford. If you’re checking out a
new location, you might find it isn’t what you expected. “You wouldn’t want to
relocate to Florida only to realize you want to continue working or your family
needs you closer,” Drake says. “Think about your retirement plans as well as
your family situation. If there are some decisions left to be made, wait to
make a move.”
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