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Comparing Retirement Housing Options

by Gary Foreman

It’s time to start thinking about where you will live in retirement. The wrong decision can be costly so you want to get it right. We compare the many retirement housing options to help you determine the best housing solution for your retirement years.

Where will you live when you retire? It’s one of the more important decisions you’ll make. Your choice will affect how much money you spend on housing, how much money you’ll have left for everything else, how much care and maintenance your home will require, and how much assistance you’ll have in daily living as you grow older. If you think that’s important, read on.

Moving can be expensive in terms of money, time, and energy spent. You don’t want to make a decision that you’ll regret in a year or two. Therefore, take your time and make an informed decision about where you’ll live during your retirement years.

Condo Retirement Living

Has home maintenance and upkeep gotten harder over the years? It’s not surprising. The Saturday morning lawn care you used to enjoy is more of a challenge now, and it’s not getting any easier. That’s why a condominium could be a good choice for your retirement years.

The obvious benefit is that you aren’t responsible for outdoor maintenance chores and upkeep. You no longer have to clean gutters and shovel snow. You will, however, need to call in a plumber if your sink won’t drain.

Since you’ll own your condo, you’ll enjoy any price appreciation or suffer any loss in value. And, as an owner, you’ll have the option of borrowing against it, including a reverse mortgage.

If you’ve been living in a detached single family home, you do give up some freedom when you move to a condo. With someone living above, below and beside you, noise can be an issue. If you’re in a retirement condo, you won’t need to worry about party noise, but you might have a neighbor who has trouble hearing their television!

Whether you’re in a condo that’s 50+ or not, there will be a condo association. They will have rules about outdoor decorations, overnight guests, and a variety of things. You’ll want to check these rules before you make a decision. Condo living may or may not be for you.

Senior Living Condos

Some condos are set up as a “senior living condo.” These buildings require that owners/renters be 55+. These are very similar to ordinary condos except for the age restriction.

They tend to have more rules and you might find yourself dealing with some “condo commandos” who want to make sure everyone follows all of those rules.

Some senior condos have a social life that’s perfect for retirees. It’s easier to find a fourth person for bridge or a game of golf. Groups that regularly share dinners or discuss books are also possible.

Rent vs. Buying

Many retirees think that renting is more expensive than owning their own home or condo. And, in some cases, they’re right but not always. You’ll need to do some calculations. These calculations will require you to make some assumptions about how much rent, insurance, and property tax will rise. You’ll also be taking a guess at how much maintenance will cost.

There’s also the emotional aspect to consider. Some people just feel safer knowing that they own their home and no one can take it from them. Others want more flexibility. If they don’t like their neighborhood or neighbors, it’s much easier to pack up and move if you don’t have to sell your house or apartment.

A report from the Harvard Joint Center for Housing Studies shows that people in their 50s and 60s accounted for the largest portion of rental market increase between 2006 and 2014.

Owning your home does allow you to enjoy any increase in value. Will housing prices increase over the next 10 to 20 years? Most likely they will. If you continue to own a home, you’ll participate in that increase.

Owning your home also means that you don’t need to be concerned with rent increases. As long as you have a fixed mortgage (if you have a mortgage at all), only things like property taxes and homeowner’s association fees can increase.

You can’t leave a rental to your kids. For some, that’s an important consideration, and for others, it is not so critical.

On the other hand, if you own your home, you’re responsible for maintenance and repairs. If the fridge quits cooling, it’s your problem. If the roof leaks, you’ll bear the cost of repairing or replacing it.

Expert Interview: Rent or Buy In Retirement?

Rental Apartment Retirement Options

A major attraction is that you no longer have to be concerned with maintenance. Problems can easily be solved by a call to your landlord.

Some larger apartment buildings have their own pools, exercise rooms, and entertainment rooms. Now that you have some extra time, you’ll be able to enjoy them.

Renting is also more popular if you want to live near your children, but they’re likely to move geographically in a few years.

If you enjoy traveling, apartment living offers another advantage. You can pretty much lock your door and head off on your trip. There is no need to worry about lawn maintenance or the other things that homeowners need to deal with.

Many apartment buildings limit their tenants to ages 55+. This not only limits noise, but it also means that amenities are geared for a mature age group.

Housing Rentals in Retirement

Your costs are limited to your monthly rent and utilities with no maintenance or repairs to affect your budget. Renting is usually cheaper, especially if you have a mortgage payment.

It’s easier to move. You don’t need to put your house up for sale and deal with a realtor and buyers. Just let the landlord know that you’re not renewing the lease.

Of course, the landlord has the option of raising your rent when the lease is up, and oftentimes, they will.

And, while you’re not responsible for repairs and maintenance, you are at the mercy of the landlord or rental management company. If the stove won’t cook, you’ll be eating take-out until they get around to having it fixed or replaced.

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Downsizing Retirement Options

It’s true that you don’t need as much space when you’re kids are grown and on their own. Typically, a bigger house is a more expensive house and money wasted if you don’t need the space.

Not only is a bigger home more expensive, it’s also harder physically to maintain. For many, that’s the most important reason to downsize.

Another reason to downsize is to eliminate basement or second floor steps that can become difficult as you age.

Typically, you’ll save money if you downsize, but that’s not always true. In some states, property tax increases are capped for long-time property owners. It’s possible that moving from your home of 30+ years could cost you more in taxes even if the newer, smaller home is less valuable.

You’ll also face the cost of moving. If you haven’t paid for a professional mover in awhile, you may be surprised by how much it costs. Like everything else, moving costs more than it used to cost. Get some estimates before you make your final decision.

A successful downsize also means that you get rid of a lot of the things that you accumulated over the years, including everything from excess holiday decorations to toys that your kids played with years ago. You won’t save money if you just move those things to a storage rental.

There’s also an emotional side to consider. You may have marks on a wall or doorframe showing how tall the kids were as they grew and dozens of memories of holiday meals in the dining room. Only you can decide whether you’ll be able to take those memories with you to a new home.

Downsizing Retirement Options

It’s true that you don’t need as much space when you’re kids are grown and on their own. Typically, a bigger house is a more expensive house and money wasted if you don’t need the space.

Not only is a bigger home more expensive, it’s also harder physically to maintain. For many, that’s the most important reason to downsize.

Another reason to downsize is to eliminate basement or second floor steps that can become difficult as you age.

Typically, you’ll save money if you downsize, but that’s not always true. In some states, property tax increases are capped for long-time property owners. It’s possible that moving from your home of 30+ years could cost you more in taxes even if the newer, smaller home is less valuable.

You’ll also face the cost of moving. If you haven’t paid for a professional mover in awhile, you may be surprised by how much it costs. Like everything else, moving costs more than it used to cost. Get some estimates before you make your final decision.

A successful downsize also means that you get rid of a lot of the things that you accumulated over the years, including everything from excess holiday decorations to toys that your kids played with years ago. You won’t save money if you just move those things to a storage rental.

There’s also an emotional side to consider. You may have marks on a wall or doorframe showing how tall the kids were as they grew and dozens of memories of holiday meals in the dining room. Only you can decide whether you’ll be able to take those memories with you to a new home.

Retirement Living with Your Children

Intergenerational living has become fashionable again. Not only are more adult children choosing to live with their parents, the reverse is true as well. Many retirees are choosing to live with their adult, empty nest children.

Until the 1940s, multigenerational homes were quite common. And, while they’re still not common, there has been resurgence in the last 20 years. It’s estimated that about a third of seniors would consider moving in with one of their children and half of the children would consider having a parent move in with them.

The best situation is where the home includes a “mother-in-law” suite. That would include a separate bath, sitting area, and perhaps even a small kitchenette. Many even have their own outside entrance.

Part of making a multi-generational home work is providing enough privacy for everyone in the home. Children in their 30s and 40s don’t want to be parented. You’re not in a position to declare curfews and monitor when they come home.

Remember that you’ll be living in someone else’s home. For some close families, that’s not an issue, but for others, it could pose a problem.

You’ll have more noise and commotion than if you lived alone. Grandkids and pets will do that. It’s not like they’ll be going home and you’ll get some quiet. They are home. Do you have the patience to be around the grands every day?

There are also daily schedules to consider. Will you be a regular part of mealtimes? Or are you on your own? What about laundry day? Again, will your laundry be mixed in with everyone’s laundry or will you be responsible for your own laundry?

Address the money issue before you make a decision. Will you be paying rent? Contributing to groceries and utilities? If so, how much? And what happens if you no longer have the money to keep up with the rent? What then? It’s important that you discuss these things before you make a decision.

Communal Living

More than a few of us lived in various communes during the 60s and 70s. While most of us returned to more traditional living arrangements as we entered our 30s, a few are bringing that commune spirit back again in retirement.

The arrangements vary. Some are as simple as three or four retirees moving into the same house like the Golden Girls TV show. Others choose to buy/rent a house or apartment among other retirees. Some are not official 50+ communities but rather friends choosing the same neighborhood.

An increasingly popular option is a home with more than one master bedroom suite with a common living room and kitchen area.

One advantage to a shared living arrangement is that the workload is shared, too. Our parents used to say that “many hands make for easy work,” and they were right. It’s also nice to have close friends when someone is sick or needing some rehab.

Move to a 55+ Community

One growing option is the retirement community. Many consider this the best retired life has to offer. Some like “The Villages” in central Florida are quite large with a population of over 50,000! Others are much smaller, more intimate.

Like the size of the community, the number and variety of amenities varies greatly. Swimming pools, clubhouses, and exercise rooms are common, but some offer everything up to their own shopping district. Most have covenants that forbid sale to anyone under 55.

There are some drawbacks. Houses and condos tend to be “cookie cutter” or very much alike. And many of your neighbors will be similar, too. Depending on your viewpoint, that can be very good or very bad.

Also, there will be rules concerning the age of houseguests and how long their visits may last. Most communities have other rules concerning outside decorations and home upkeep. More than one community has been put into an uproar when the homeowner’s association and a homeowner disagree over what’s permitted.

Buy into a Continuing Care Community (CCRC)

Recently continuing care communities have become more popular, in part because people are living longer and often need additional personal care as they age. Typically you’ll buy an independent living townhome or apartment. Then if your needs change, you can move to an assisted living apartment and, if necessary, a skilled nursing home bed.

One clear advantage is that you know that your future needs are covered. If you need assisted living, you’ll get it. You don’t need to research which assisted living home is best. The shopping is already done.

Continuing Care Communities have a substantial initiation fee or buy in. Prices range between $100,000 and $1,000,000. Monthly fees are generally in the $3k to $5k range although extra care can be expensive.

There are three basic types of contracts for CCRCs:

  • Life Care or Extended Contract is the most expensive option, but offers unlimited assisted living, medical treatment, and skilled nursing care without additional charges.
  • Modified Contract offers a set of services provided for a set length of time. When that time is expired, other services can be obtained, but for higher monthly fees.
  • Fee-for-Service Contract keeps the initial enrollment fee down, but assisted living and skilled nursing will be paid for at their market rates.

Estimating what your future needs will be is important when you select which contract to choose.

In some cases if a medical need justifies a change, a partial refund of the entrance fee may be obtained, but know in advance what those provisions include. They should be specified in your initial contract.

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RV Living

RV living is a unique lifestyle options for retirees because your home is wherever you’re parked tonight. You do have the option of settling in one place, but if you choose to be a nomad, it’s just a matter of disconnecting the electric, water, and sewer and hitting the road.

If you decide to stay in one place, you’ll need to decide the type park you want. Some offer first class facilities much like an exclusive resort. Others offer only the most basic of needs. Obviously, the costs will vary accordingly. You’ll want to research costs before you actually purchase an RV.

Many parks require an annual lot rental to get the best rates. Therefore, include that in any expense calculations you make.

RV parks are a great place to meet people. Typically their lifestyle is leisurely, and they’re willing to share experiences. Some RVers even caravan from park to park together, spending a few weeks at a new location before they head for their next destination.

The RV lifestyle allows you to be free to visit national parks and other scenic locations. It is a chance to explore the beatnik life we were too young to experience in the 1950s!

Pre-owned RVs can be had for as little as $10-20k, but for a well-equipped new RV, you can easily spend $100k or more. Like your car, an RV suffers the greatest annual depreciation in the first year or two. Your best buy is often an RV that’s three or four years old. Many owners live the RV lifestyle for a few years and then put their motor home up for sale. You can comparison shop and bargain for an RV just like you would on an automobile. And, if you’re buying used, you should have an RV mechanic check out your potential purchase before you finalize the deal.

Some RVs require a vehicle to pull them. Others are self-propelled. In either case, your choice will affect whether you have a vehicle and what size it is.

Generally fifth wheel vehicles are not eligible for a mortgage, but are financed similar to a car or truck. Self-contained motor homes can be financed on a 15-year mortgage.

If you plan on driving a lot, remember that whether you’re towing a fifth wheel or driving a self-contained motor home, your gas mileage won’t be good. Most are in the single digits per gallon.

Also expect that any repairs could be expensive. Many of the conveniences that make RV living possible use custom items that can be expensive to repair or replace. You might choose to buy an extended warrantee plan.

Spend a day or two visiting local RV parks. Talk with the owners and tell them you’re considering joining their ranks. You’ll hear firsthand what RV living is like.

You do have the option of renting one for a month or two to see how you like the lifestyle, or you can buy a relatively inexpensive used RV for a seasonal test run.

Remember that if you’re not in an RV park, you’ll need to supply your own electricity. Staying where water and electric hookups are available is convenient, but it can be expensive.

Also, there are some disadvantages to not having a permanent address. It can make licensing, insurance, and mail difficult.

Choosing Where to Retire

Real estate agents are fond of reminding buyers how important location is. Typically they mean within a town or city, but it’s also true when you decide where you want to live in your retirement years.

The cost of living, tax laws, and weather are key factors in choosing where to live. Also how close (or far) you are from kids and grands.

You’ll find many articles headlined “10 Best Places for Retirement,” but what’s great for you might not be so good for me. Only rarely will an article tell you how much they emphasized all the different components that go into the ratings.

If you’re thinking about moving geographically in retirement, you’ll want to do your best to make a good decision. Decide which factors are most important to you. If your budget is tight, the cost of living will be important. If you expect to continue to have an income, whether the state/city has an income tax will play into your decision. And only you can say how important it is to be near your kids and grandkids!

Retiring Outside the U.S.

Retiring outside the states is becoming a more popular option. This is in part because many foreign countries have a much lower cost of living. Many cost half or less of what you’d spend in the states. That’s very attractive to retirees living on a strict budget.

However, retiring outside the U.S. is an option that requires quite a bit of research before you make a move. You’ll have many questions to answer before you move to a foreign country like:

  • What are the country’s residency requirements?
  • How will living in a foreign country affect your U.S. taxes?
  • Can you bring your pets?
  • What will you do about medical care and insurance?

Forty or fifty years ago when we were just starting out, retirement seemed so far in the future that we couldn’t even conceive of it. Now for many of us, it’s time to not only conceive it, but to make important decisions as to how we’ll live it. And, like most of our lives, we won’t be content to just do what our parents and grandparents did. We’ll want to have more and different options from which to choose. It appears that we’ll have many different retirement housing options available to us.

Reviewed April 2019

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