Wednesday, October 26, 2016

Top Over-55 Communities in U.S.

Although many people decide to stay in their current homes when they retire, others choose to move into private, age-restricted retirement communities.  These over-55 communities, which now exist throughout the United States, must comply with federal guidelines and may have additional special requirements of their own.  For many retirees and those who are nearing retirement age, life in an over-55 community can seem like a dream come true.  Some people even describe them as "summer camps for adults."

What to Expect in an Over-55 Community

The amenities in over-55 communities vary, depending on the location.  They nearly all have swimming pools, exercise facilities, meeting rooms and art studios.  Many of them have golf courses and tennis courts.  Some have more unique facilities such as fishing lakes, hiking trails, garden centers or equestrian facilities.

Over-55 communities are NOT skilled nursing or assisted living facilities.  The people who live in these communities are able to live independently.  The properties may consist of single-family homes, attached homes, townhouses, condominiums, apartments or a combination.  No matter how the housing is designed, the communities are full of people who want to remain active and involved in a variety of physical, social, artistic and intellectual activities for as long as possible ... years before they are ready for assisted living.

Some people are able to remain in their over-55 communities well into their 90's, especially if they avail themselves of private or community help in the form of caregivers, meals-on-wheels, taxi vouchers and other assistance that makes it possible for them to remain in their private homes.

However, not everyone in an an over-55 community is elderly.  Only one person in the home needs to actually be age 55 or older.  Their spouse can be any age, so it is not unusual to see a wide range of adults living in these communities.  Children under the age of 18 are not allowed to live in the home permanently, although they can enjoy visiting their grandparents, even for a few weeks, in most cases.

Which Over-55 Communities are Ranked the Highest?

The list below shows the top choices from the website  All of the communities listed below are well worth checking out. Of course, everyone should thoroughly investigate any community before moving there.

Even if a community is not listed below, but it is in a town where you would like to live, you should look it up online and personally visit it.  New communities are being built continually and many established ones are very nice, even if they did not make it onto the "top" community lists.

Recent Recommendations by

The Villages - The Villages, FL
Sun City Hilton Head - Bluffton, SC
On Top of the World - Ocala, FL
Sun City Summerlin - Las Vegas, NV
Solivita - Kissimmee, FL
Sun City Carolina Lakes - Ft. Mill, SC
Sun City Huntley - Huntley, IL
Sun City Texas - Georgetown, TX
Laguna Woods Village - Laguna Woods, CA
Sun City Center - Sun City Center, FL

You'll notice that the communities mentioned above include locations in Florida, South Carolina, Illinois, Nevada, Texas and California ... giving retirees options from coast-to-coast.  The communities have also been built by a variety of developers.

Websites to Help You Learn More About Over-55 Communities

There are several websites that list the over-55 communities in every state.  People who are looking for a community will want to read the reviews on these websites, look up the community's website and do additional research, including paying a visit to the locations they are considering.  They will also want to compare several communities that interest them.  Lower in this article you will find a list of questions you should ask.

In addition, it is important to do a Google search on the community to see if people have posted anything negative online about it.  Nearly every community will have some detractors.  However, it is smart to know the potential problems before you fall in love with a location and then discover that it is in a part of Florida where sinkholes are common or in a part of Arizona where water shortages are becoming an issue.

The websites below will help you find a variety of over-55 communities in the states that interest you:

What to Know When Considering an Over-55 Community

When investigating different retirement communities, you may discover that some locations mentioned on the sites above are not actually age-restricted communities.  Make sure you understand whether you are reading about an actual over-55 community or simply a subdivision that is open to anyone, but is especially popular with retirees. 

Occasionally, you may see lists that recommend small towns and neighborhoods that are very appealing to retirees.  Frequently, these neighborhoods have a large number of retired residents, but they also have residents in all age groups.  It is important to know whether or not the community you are looking at is age-restricted.  There are advantages and disadvantages to both, but there are differences in what you can expect in the form of amenities in each kind of neighborhood.  You want to know what to expect, especially if you are traveling a large distance to visit the location.

Questions to Ask When Visiting an Over-55 Community

Another issue you need to consider are the size of the homeowner's dues and which amenities are included or discounted for residents.  For example, if you are comparing two communities and you like to play golf, you will want to know if the cost of playing golf is included as part of your homeowner's dues in the communities that interest you.  If not, are the golf course fees discounted?

What about other activities such as exercise or art classes?  Are they free or low cost?   You will also want to know which home maintenance costs are covered ... exterior painting, grass mowing, and similar services, for example. Prospective residents need to look at the total cost of living in their new community in order to fairly compare them and so they can be sure they will be able to afford to live there for the rest of their lives.  Some newer Sun Belt communities even include solar panels in the purchase price.  That can save the buyer a substantial amount of money each month, especially in hot climates.

You will also want to consider the amenities that are available nearby, but outside the community.  Is there a college in the area that offers interesting, low-cost classes for senior citizens?  If your new community does not have a golf course of its own, are there affordable ones within a short drive?  Are there a variety of restaurants?  Are there stores or a mall within a reasonable distance?  How far will you need to drive to buy groceries?  Is there bus or taxi service available, should it become difficult for you to drive?  How far away is the nearest hospital?  Will you be able to find the types of entertainment that you enjoy ... movie theaters, live theater, sports venues, museums, etc.?

You will also want to know if there are any special rules for residents, such as financial requirements, or restrictions on visits by grandchildren.

Once you have considered all the above items, you should be able to narrow down the choices and find the best over-55 community for you!

If you are interested in more information about where to retire, financial planning, common medical issues, Social Security, Medicare and other common retirement issues, use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles.

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Photo credit:  Photo of Laguna Woods Village golf course taken by author, Deborah Dian

Wednesday, October 19, 2016

Social Security at Age 70 Maximizes Future Income

We have all been told by financial and retirement planners that the best way to maximize the size of our Social Security benefits is to wait until age 70 to begin collecting.  However, according to research completed by the Transamerica Center for Retirement Studies, only one percent of retirees who are currently receiving Social Security waited until they were 70 years old before they claimed their benefits.  The median age to claim was 62, which is also the earliest most people can claim, meaning that the vast majority of senior citizens are willing to take reduced benefits rather than wait eight years in order to receive substantially more money.

Why Don't People Wait Until Age 70 to Claim Social Security?

If people can receive more money by waiting to receive their benefits, why don't they?

1.  Most Americans cannot afford to wait. As soon as they decide to stop working, they must begin to collect their benefits because they don't have enough assets to support themselves.  The median household between the ages of 60 and 64 has approximately $202,000 saved for retirement.  At a 4 percent withdrawal rate, that is only $8,000 income a year, which is not enough income to live on.

2.  In addition, 60 percent of retirees stop working sooner than they planned ... which means they need to start taking their benefits earlier than anticipated.  Of that 60 percent, about two-thirds stop working because they lost their job; a little over one-quarter of them retired because of health problems.

3.  Some Americans have been misled to believe that Social Security will soon run out of money, so they rush into claiming their benefits as soon as possible.

4.  A few people nearing retirement believe they can successfully invest their Social Security benefits while they are still working, doing even better than the increased earnings they will receive by waiting.  While a small number may be successful, most of these people will find that their guaranteed increase in benefits is more reliable than their ability to invest the money wisely despite the ups and downs in the market.

When Should You Take Social Security Benefits Early?

Yes, there are times when the smart move could be to take your Social Security benefits as early as possible.

1.  If you have no other way to support yourself because you have lost your job in your 60's or you have developed a major health problem, then your only alternative will be to claim your Social Security ... and be thankful it is available.

2.  You may also wish to collect early if you develop a life-shortening terminal illness.  The average man at age 65 can expect to live until age 84.3; the average woman should live until age 86.6.  If your life expectancy has been significantly reduced because you are on kidney dialysis or have a cancer that has metastasized, for example, then you may have good reason to take your benefits early.

Spousal Benefits Can Complicate the Decision

Even if you fall into one of the categories that would justify taking your Social Security benefits early, there is one reason why you may decide to postpone collecting as long as possible ... the effect your decision will have on your spouse.

For example, if you could receive $3,000 a month at age 70, your spouse would also be entitled to $1,500 a month at their full retirement age of 66 or 67.  If you die after age 70, your spouse would then get their benefits bumped up to what you have been receiving.  On the other hand, if you collect in your early 60's and only receive around $2,000 a month, everything will be proportionally reduced for your spouse, as well.  If you want to be sure your spouse will have enough money to live on after you are gone, you may want to postpone collecting as long as possible.

Does It Make a Difference in Your Total Lifetime Earnings?

While your monthly benefits are higher the longer you wait, will it really make a difference to your lifetime earnings?  The Social Security Administration uses actuarial tables to estimate how much more people can receive the longer they wait.  While, of course, individual results will differ depending on their actual lifespan, the Social Security Administration say, "As a general rule, early or late retirement will give you about the same total Social Security benefits over your lifetime."

Of course, that applies to those people who live an "average" length of time!

If you are interested in learning more about Social Security, Medicare, financial planning, where to retire, common health problems or other issues related to retirement, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional articles.

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Wednesday, October 12, 2016

The Retirement Income Red Zone Danger

If you have put together a sizeable portfolio prior to retirement, knowing how to protect those assets during your first five years after retirement will be extremely important, especially if you want to be sure they will last the remainder of your life.  These first five years after retirement are sometimes referred to as the red zone ... the time when decisions you make can have the biggest impact on your future.

What Bad Decisions Do People Make in Early Retirement?

When people first retire, they often have a number of of pent-up dreams they wish to fulfill.  They still feel healthy and they may want to move somewhere new, travel, buy a boat or RV, and have a little fun.  After all, they have waited and saved their entire lives for this moment and they want to enjoy it before age and illness slows them down.

Next, retirees often stop saving and putting aside money for the future.  As they pull money from the principal without replacing it, retirees gradually see their assets become depleted.

In addition, retirees sometimes do not prepare adequately for rising expenses or problems that could come up in the future, including extra medical expenses such as health insurance deductibles, expensive treatments, long-term care, etc. They also sometimes fail to prepare for things like replacing their car, hot water heater, furnace or other expensive items.

Even if new retirees do not make any of the above mistakes during their first five years after retirement, their assets could become depleted because of poor investment decisions.

Should You Invest for Growth or Safety?

Investment advisors recommend that your retirement assets should be invested for both growth and safety ... but what is the correct balance?  According to an article by CNBC writer, Kelley Holland, "Five Crucial Retirement Years For Your Money," it is extremely important that you do not have negative investment returns during your first five years of retirement.  When experts from Prudential Insurance examined two hypothetical $1 million portfolios, Portfolio A had negative returns for 4 of the first 5 years, but positive returns for all of the remaining years of its existence.  Portfolio B had all positive returns in the first 5 years, but had negative returns in 4 of 5 years between years 25 and 30.

What were the results?  Portfolio A had dropped to zero within 15 years.  Portfolio B had doubled in value by the end of 30 years, despite the negative returns at the end.

What Should an Investor Do?

After examining the results of these two hypothetical portfolios, experts believe it is important that investors manage their money conservatively early in retirement so their portfolio continues to grow in value, even modestly, during this crucial period.  In order to do this, it would be a mistake for retirees to make risky investments or begin depleting their principal for trips or other large purchases.

Retirees need to work with their investment advisor to make sure their money is wisely invested.  Holland recommends that no more than 40 to 60 percent of a retirement portfolio should be in stocks (and, obviously, these should be Blue Chip stocks, not high-risk ones).

As retirees begin to live off their assets, their withdrawals should be modest and their asset allocation should be conservative, particularly during the first five years.  In other posts on this blog, we have reported that most investment advisors suggest that no more than 3 percent of assets should be withdrawn for living expenses during retirement, with tiny increases in the withdrawal rate as the years go by.  If the principal balance is invested conservatively, the assets of most people should last well over 30 years.

Some investment advisors also recommend that any income from the assets that is in excess of what is needed for living expenses should then be invested in stocks which, hopefully, will appreciate and provide an extra cushion for the future. This extra cushion will be especially helpful if there is a stock downturn in the future ... which is almost certain to happen every few years.

In the end, this plan is the one that is most likely to leave you with enough assets to last the remainder of your life.

If you are interested in reading more tips about handling your retirement income, where to retire, common medical problems, Medicare, Social Security and more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional articles.

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