Week 12: Where Will You Live?

Course Progress:

“My parents didn’t want to move to Florida, but they’re in their 60s, and that’s the law.” — Jerry Seinfeld

At this point, you’ve tackled most of the major factors in your financial retirement picture.

You have a handle on your debt and a realistic spending plan; you know your assets and your major options to use and grow them. You can estimate your retirement income and make any course corrections needed.

Now we’ll bring all that work and discovery home — literally.

One of the final big factors in your retirement is where to live. Few things will affect your day-to-day more, or take up a bigger chunk of your budget. Once again you’re faced with many options. Are you staying in place or downsizing? Could you live with family or in a retirement community?

Let’s tackle these one by one.

Will your home still meet your needs?

Our housing priorities can evolve as we age. For instance, a good school district may not matter as much as access to good medical care, accessibility and a ground-floor layout.

Access to good medical care

Living near high-quality medical facilities becomes more important as you grow older. Even people who have been healthy all of their lives can develop conditions in older age that require ongoing care.

Find out if a community has the medical facilities you need before you relocate. Learning that the specialists you require aren’t available someplace should be a deal breaker. You won’t feel safe if you live in an area that can’t provide good medical care. And traveling long distances to see a doctor can be difficult as you age.

Choose doctors certified through the American Board of Medical Specialties. This ensures that your doctor has a medical degree from a qualified medical school and completed three to seven years of accredited residency training.

Ideally, find someone you can stick with, not someone who will retire shortly after you do!

The Office of Disease Prevention and Health Promotion at the U.S. Department of Health and Human Services suggests finding a doctor who will:

  • Treat you with respect.
  • Take time to hear your opinions and concerns.
  • Encourage you to ask questions.
  • Explain medical issues in language you can understand.

These websites can help you determine whether a community offers good medical care:

  • The American Medical Association’s DoctorFinder offers information on more than 814,000 physicians in the U.S. You can get information about specialty training and board certification.
  • HealthGrades shows patients’ ratings of their doctors.
  • U.S. News & World Report ranks hospitals by performance nationally.
Read: “7 Great Reasons Not to Move After You Retire”

Moving to be near family

Many people who move to distant destinations in retirement end up having regrets. Grandparents, particularly, often realize that they miss being near family and that a Skype conversation is no match for personal contact.

But before making your kids into neighbors, make sure you have buy-in. It’s important to respect the privacy of your grown children. They may be less excited by the idea of having you living nearby.

Find out if they have any moves of their own planned. You don’t want to move to a new community only to be left behind. You can wear out your welcome if you spend part of every day at your grown child’s home. Make sure your kids desire togetherness as much as you do.

Living with children and grandchildren

Assuming they’re fine with it, living with your grown children can make financial sense.

The Pew Research Center reports that multigenerational living is becoming more common. In 2016, a record 20 percent of the U.S. population lived with multiple generations in a single home.

U.S. News & World Report notes that a survey of renters 55 and older found that nearly 6 out of 10 wanted to move closer to their families or move in with them.

Among the reasons parents live with adult children:

  • A child may return home because of a financial setback.
  • Sometimes the parent is the one with financial difficulties and asks to move in with the child.
  • Aging parents often need someone to look after them, especially if they can no longer drive.

The key to peaceful coexistence is to set ground rules and stick to them. Before you move in, have a frank discussion about finances. Understand everyone’s responsibilities for such things as buying groceries, making mortgage payments and paying for utilities.

Financial discussions can be awkward, but they help avoid misunderstandings.

Moving to another country

You may dream of finding a new home outside the U.S. where you can live on your Social Security benefits or a small savings.

If so, start by reading about the best places to retire abroad. Medicare doesn’t cover health care outside the U.S., so explore your options carefully. Make sure that you’ll have adequate medical care wherever you go.

Once you find the “right” place, take some time to get to know it. Like dating, you want to get to know your new love before committing.

Wait to purchase a home — no matter how low prices appear — until you’ve lived there a year, know the local real estate market, laws, taxes and can determine if this is where you truly want to live.

Choosing a retirement community

Some retirement communities are intended only for people who are able to care for themselves. Others offer in-home services for residents to age in place.

Read: “The 25 Best Places in the U.S. to Retire in 2019”

Retirement communities generally take care of your yard work and home maintenance. They also may offer amenities such as fitness centers, group trips to local attractions and classes. Bear in mind that living in a retirement community isn’t cheap:

  • Entry fees can range from the low- to mid-six figures.
  • Monthly charges range from $2,000 to more than $4,000.

Shop for a retirement community that matches your lifestyle. Perhaps living in a golf course community is your idea of heaven. If you like pets, avoid communities where they aren’t allowed. Are you a gardener? If so, make sure you’ll be able to plant your own garden.

Talk to current residents to find out what kinds of activities they enjoy. If you plan to limit your driving, ask about transportation options.

Keeping housing affordable in retirement

The cost of your home can make or break your retirement, but there are several ways to rein it in.

Reducing housing costs

You’ve probably heard that a good way for homeowners to reduce retirement expenses is to pay off their mortgages. You learned how to do it with your Debt Destroyer in Week 3. If you can pull that off, it will eliminate one of your biggest monthly expenses.

If paying off your mortgage isn’t an option — and even if it is — consider downsizing. Selling your home and moving to a smaller dwelling can free up assets to add to your retirement savings.

People often find more-affordable housing by moving from urban centers to suburban or even rural communities. If you’re not tied to a job, you’re free to live wherever your housing dollar goes the furthest.

Read: “How to Live Rent-Free (or Way Cheaper Than You Are Now)”

There are numerous listings on the internet of the best places to retire; we write about a lot of them. But since everyone’s priorities and dreams are different, they’re not conclusive. They are, however, a good place to start, since they identify cities that combine affordability with a high quality of life.

If your aim is to reduce taxes in retirement, Kiplinger has created a map of states with the lowest tax burdens. Sperling’s Best Places has its own ranking of the best places to retire.

Taking in boarders

Another cost-cutting strategy is to take in a roommate to share your housing expenses. You could also rent out a bedroom or two on a temporary basis by registering with sites like Homestay, VRBO or Airbnb.

If you’re an empty nester with a large home you’re reluctant to let go of, this can be ideal. You turn your home into a cash-producing asset. Not only do you get help with the mortgage, taxes, utilities and maintenance, you also meet new and interesting people.

If you do opt for a long-term roommate, take your time and find someone you’re compatible with. Taking in a roommate means losing privacy, so make sure you set firm ground rules about such things as entertaining guests and housekeeping responsibilities.

Renting instead of owning

Renting in retirement can make more sense than owning. If you’re an empty nester living in a house that was built for four or more people, you may want a smaller place that requires less upkeep, both financially and in terms of your time.

A 2016 Freddie Mac survey showed that more than 5 million people age 55 and older are likely to rent their homes by 2020. The factors influencing their decisions include greater affordability, less home maintenance and living in “walkable” communities that require less driving.

Renting can be a smart choice if you’re not sure where to live in retirement. It gives you the ability to try out a new location without making a big financial commitment. If it doesn’t work out, you move and rent in a new community.

Read: “7 Reasons You Should Rent a Home in Retirement”

If you sell your home to become a renter, you can add the profits to your retirement savings. Once you no longer have your money tied in home equity, it can be invested to create a revenue stream.

Renting also gives retirees the flexibility to move whenever they like. It’s a more carefree life, with no expense or labor for home and yard upkeep. Leaky faucet? Just call the landlady. Let her deal with it. But the flip side of that flexibility is a big downside: instability.

However, location is everything. Research your local market thoroughly before making any decisions. Be aware of how quickly rent is rising in the area, and get a sense of demand and availability. Landlords may hike your rent at will or give notice that you must leave because they want to move into the home or decide to sell it.

Consider a reverse mortgage

Many retirees who plan to remain in place turn to reverse mortgages to reduce their housing expenses. We talked about these as a source of income (with pitfalls and high costs) in Week 9.

To recap: A reverse mortgage is a mortgage. You’re borrowing money against your house. But instead of paying every month on your mortgage, you’re getting money every month. You can take it out as a lump sum or through a line of credit.

A reverse mortgage is like any other: You’re borrowing against your house. Since you’re not paying on your mortgage, the interest is piling up, increasing the principal. In other words, your mortgage is getting bigger and bigger.

The loan doesn’t have to be paid back until the home is sold or otherwise vacated — such as when the borrower dies — or if the borrower fails to make needed repairs or to pay taxes or insurance, which remain the borrower’s responsibility.

Bringing it all home

It’s important to take your time when considering where you’ll live in retirement. It’s one of the biggest factors in your day-to-day going forward and in your budget.

You’ll need to find an address that fits your finances as well as your lifestyle. You’ll also need to take into consideration your health and how long you’ll be able to live independently.

Your options include:

  • Staying in place, possibly with a reverse mortgage or by renting out space.
  • Downsizing to a home you can afford.
  • Renting.
  • Moving in with or near family.
  • Moving abroad.
  • A retirement community.

If you are uncertain about being able to afford the home you want, meet with a qualified financial adviser to go over your options. Remember, you’re not just looking for a great place to live. You’re also looking for the best value for your money.

Your task for this week

Now that you’ve heard several options, answer the questions we started this week with:

  • Do you plan to keep your present home or relocate to be closer to family?
  • Do you envision a leisurely life or taking on new challenges?
  • Would a retirement community best suit your needs?
  • Are you prepared for possible changes in health over time?

Use this flowchart to help.

Download: Week 12 Worksheet: Where to Live

In the final week, we’ll propose a timeline for transitioning to retirement. Where you live will be a big factor, so start thinking about where you want to be. What’s your plan? Maybe you can get some more ideas from our Facebook group.

  Week 12: Feedback

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