You really need to determine how your retirement living choices will affect your finances and lifestyle before you make a final decision as to where you’ll live when you retire. We explore retirement housing choices with an expert to learn more about what we should consider.

by Gary Foreman

Now, nearly 50 years later, I’m facing a similar question: Where will I live when I retire? This question involves important money and lifestyle considerations.

To help us understand how our retirement housing choices could affect us, we spoke with Eric Kearney.

Mr. Kearney has been helping clients reach and maintain their financial goals for over 16 years. He co-authored the book Successonomics with Forbes Media Chairman/Editor-in-Chief Steve Forbes and teaches successful pre- and post-retirees a wealth management course titled “Rejuvenate Your Retirement.”

Q. Many retirees move to be nearer to children and grandchildren. Selling your home in one city and buying in another is a major undertaking. What other options should be considered if you’re planning a move to another city?

A. Retirees often move for several reasons. Some want warmer weather, some want to be closer to families and others move to reduce their living expenses. Is the move always the right thing to do? It depends on how you prepare for it.

Consider your budget and look at your monthly expenses paying particular attention to property taxes and insurance. If you live in a tax sanctuary state where there isn’t any state taxes, then you have to make sure that your income plan takes into account additional taxes that you may owe in the new state.

I had a client that moved from Florida to New York. We redid their financial plan to consider the state taxes and increased property taxes. Even though they knew about them, they were surprised at the increase needed on an annual basis to move to a more expensive state.

You may want to consider renting a home before purchasing to make sure that you like the area and that shopping, parks and entertainment are easily accessible, as well as public transportation if you need it. Some people also consider their doctors’ offices as they get older for convenience.

Related: Moving Away From Family To Better Afford Retirement Living Expenses

Q. There are more housing options for retirees than ever before – owning your home, renting, independent living or assisted living, whole communities for retirees. Some require substantial financial commitments. What advice do you have before someone makes a final selection and signs a binding agreement?

A. First, you really need to set a budget and understand what you can afford to pay. Keep in mind that normal inflation can run 2.5% but medical expenses can be north of 6%.

Analyze not only your needs but your partner’s needs as well and make sure that the facility has the capabilities to take care of you if you or your partner worsen down the road. Many people make the mistake of being in denial of getting even sicker and find that after a few years they have to move to another facility with more needs.

Make sure that the location also meets your needs and that you will be happy with the environment. Does it have a coffee shop, a pool, a movie theater, amenities? Does it allow you to have pets? Do they have social events and so forth?

Meeting new friends is a vital part of life planning in retirement. Staying socially fit makes you happier and even possibly healthier in retirement. Aside from socially, what caliber of medical facilities do they have?

Make sure that you have a trusted professional go through any contract before you sign making sure that you understand all of the fine print before committing.

Lastly, ask for referrals from families who have been in the facility or community for awhile and ask questions. Don’t be afraid to take your time making any decision. You can also visit a virtual village which is a non-profit that posts information for seniors online. Checkout vtvnetwork.org for more information.

Expert Interview: Things To Watch for When Signing an Assisted Living Contract for/with a Parent

Q. Many people want to leave their home as an inheritance. Yet, that’s not always the best option for them. What can people do who want/need to sell their home and still leave an inheritance for their children?

A. You first have to ask the children if they want the house. Many times the children cannot afford the taxes and maintenance and would rather have a more liquid asset. Inheriting a house can be an unwanted burden to a child, especially if they are from out of the area.

If the person has to sell their home and still wants to leave an inheritance, they have a few options. They can buy a whole life policy and make the child a beneficiary or use a part of the proceeds to open a Roth account for the beneficiaries. They can also seek out an income stream investment from the proceeds of the sale and the beneficiary could get whatever is leftover in the account.

Related: 6 Things To Discuss With Adult Children Before Leaving Them an Inheritance

Q. What’s the best way for someone to compare the financial affects of staying in their home vs. selling and renting?

A. Again, its all about budgeting and understanding how much you have and how much your life costs you. When thinking about staying in the home, see if your state has a homestead tax benefit where it helps to keep your property taxes level.

As you age, who will rake the leaves, mow the yard, wash the windows and shovel the snow? Most people forget that eventually they cannot perform these tasks and have to be able to fiscally account for these.

Also factor in how old the mechanics of your home are, including the A/C or furnace. The roof is also another consideration, as they can be expensive. Take a look at anything that may have to be updated, like bathrooms and kitchens, and lastly, is it elderly friendly with ramps instead of stairs, grab bars in the bathrooms and a safe place to bathe and shower? Sometimes moving and renting a new apartment is cheaper and easier in the long run. Age proofing a home can be expensive.

Related: Will You Be Able To Age In Place?

Q. If retirees want to stay in their home, how can they best estimate the cost of maintaining the home?

A. People love the security and comfortability of staying in their own home. Take a look at the age of the more expensive items in the home. When was it last updated? How much will it cost to make it more environmentally friendly to live there comfortably? Are you up on a hill, way out in the country or on the 25th floor?

Many people also have association fees that will never go away. Again, the maintenance of the home may have previously been done by the homeowner but may have to be turned over to someone else at some point, which are added maintenance expenses such as pool cleaning, housecleaning, lawn and snow removal.

Q. The proceeds of a home sale are an important asset for retirees. What advice do you have for them in how to reinvest those assets?

A. Take a look at your income needs now and factor inflation at 2.5%. Think about your time frame of when you may need the money. Find a product that matches your time frame and your monetary needs.

Even though you may not need the money now, down the road you may have healthcare or long term care needs that will not be covered by Medicare. It is estimated that a retired couple will spend $315,000 in their retirement on healthcare alone so you want to know where that money will be if needed.

Find a product that has low or no stock market exposure and look at several options and compare companies. Ask for references for people that have the product and call them and ask questions. Make sure that the product that you go into works for you not only now but in 5 and 10 years down the road. Look for a product that gives you options for the “what ifs” in life. More than likely it will be more beneficial finding an independent investment advisor who has a plethora of tools and products to choose from, ensuring finding the perfect financial fit for you.

• Comparing Retirement Housing Options
• Should We Rent or Buy in Retirement?
• Tax Consequences of Selling Your Home in Your 50s or 60s
• Is Downsizing In Retirement Right for You?
• Can a Reverse Mortgage Safely Boost Retirement Income?

Reviewed July 2024

About the Author

Gary Foreman is the former owner and editor of the After50Finances.com website and newsletter. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com.