Since this blog frequently features different cities, states and retirement communities that may interest those of you who are preparing to retire, this seemed like a good time to discuss some of the issues that buyers need to take to heart before they purchase a home for their retirement years. As you will see below, no single type of retirement home will be right for everyone. Some of the items mentioned below will only affect certain people. However, here are some of the different issues I have noticed over the years.
The Cost of Living in Your Retirement Home
While you may be able to find a low-interest, fixed-rate mortgage or even pay cash for your home, you need to realize that your property taxes, insurance and homeowners dues are going to increase over time. In addition, your property taxes and dues, in particular, may increase at a faster rate than the cost of living increases on your pension or Social Security benefits. If you expect to live in your retirement home for ten years or more, the cost of home ownership could become more and more stressful unless you have set aside money or left a little wiggle room in your budget to allow for these expenses.
When my parents left Missouri and purchased a home in Flagler Beach, Florida after they first retired, they loved being across the street from the ocean and enjoyed the wonderful views. However, they did not count on the extra expenses that residents incur when they live so close to the ocean. The outside compressor of their air conditioner had to be replaced every few years. Other items around the house had to be replaced much more frequently than they anticipated, as well. Eventually, my parents moved to a retirement community that is about 15 miles inland from the coast and they now have much lower maintenance costs.
Maintenance costs can also be high if you buy an older home in a charming historic town. While you may have always dreamed of living in a gracious old home, it may not be a wise choice for a couple on a fixed income. While you may plan on doing a lot of the maintenance and repair work yourselves, this can become increasingly more difficult as you age.
Even if you buy a brand new home, you still need to be sure to include home maintenance costs in your budget. The longer you live there, the more likely there will be issues that will come up.
New Expenses You Never Had Before
If you are moving to a new part of the country, you may discover that you have some large expenses that were either smaller, or non-existent, in your former location. For example, if you move to Arizona, your summer air conditioning bill may be quite high. The reverse is true if you move to a charming mountain community where you need to be prepared for cold winters and high heating bills. There are also other expenses you should consider. You may want to purchase earthquake insurance if you move to Southern California, or flood insurance if you live in a an area where the rivers occasionally overflow. Each part of the country has its own unique challenges.
In addition, when you buy special insurance to cover catastrophic events such as floods and earthquakes, you may discover that there are large deductibles. For example, earthquake insurance usually has a $5000 deductible for your personal property. If you are concerned about this, you may need to set money aside in a liquid asset account (not your retirement investments) to cover unexpected expenses you may incur in your new location.
I have known of retiring couples who purchased lofts in the downtown area of a major city or purchased homes in eclectic, mixed-used neighborhoods. Several former retired couples I knew bought townhomes within walking distance of bustling business areas where there were lots of restaurants and bars. They thought it would be fun to live in such a stimulating area. Believe it or not, one successful psychiatrist and his wife even bought a townhome in one of these areas despite the fact that a homeless man was sleeping next to the front door when I showed it to them! They insisted that they looked forward to living in such a "colorful" community. A few years later, they moved.
While living in these types of neighborhoods may not be a problem while couples are still in the early years of their retirement and they are relatively young and active, this living arrangement could make them much more vulnerable and isolated as they age. They are also more likely to become the victims of a crime.
Planning Ahead for Health Issues
Are you thinking about buying that two-story home with a basement in a charming old neighborhood? While this may be your dream home, are the doorways and hallways wide enough to accommodate a wheel chair, should you ever need one? Can the staircases handle a lift if you eventually have trouble getting up the stairs? Can you easily add safety features like grab bars to the bathrooms, or does the house have old, plaster walls?
If you dismiss these problems by saying, "We'll cross that bridge when we come to it" or "We'll just move to a retirement community if it becomes a problem," you may want to go ahead and move to that retirement community now and save yourself a move. Many modern homes in retirement communities are designed to meet the needs of an aging population, while still providing lots of stimulation and neighborhood charm.
Think About Your Adult Children
Why should your adult children be a concern when you buy a retirement home? There are several reasons. First, they will not be able to move in with you and stay for more than 60 days if you live in an age restricted retirement community. This is the federal law that governs these over-55 communities, although there are exceptions if your adult child is disabled, either mentally or physically. However, if your able-bodied child wants to move back in with you after a job loss or divorce, sixty days is as long as they can stay. To be honest, many seniors feel that this is one of the advantages of moving to an over-55, age restricted retirement community. On the other hand, there are people who may actually want to have one of their children move in with them and they should consider this when deciding where to live. There are many very nice master planned communities that are not age restricted, and these might be a better option for some families.
Even if you are certain that none of your children will ever want to live with you, you need to consider whether or not your dream retirement home is too far away from your children and grandchildren. My parents moved from Missouri to Florida when they were in their 50's, and they have owned a couple of different homes there over the years. Now they are in their 80's and really need to have family nearby. However, they are resisting the idea of returning to Missouri to be near my sister and their other relatives. Nor do they want to move to California, where I live. My mother, in particular, is adamant that she wants to stay where she is, despite the fact that they are both in failing health and my mother has developed severe dementia, which may be fueling her anxiety and fear of moving. My sister plans to force the issue in a few months and it will be difficult.
Retirees need to carefully consider whether they want to live a long distance from their families. In the early years, it will make it harder to visit grandchildren. In later years, it will be more difficult for their children to give them the assistance that they may need.
Don't Forget to Negotiate
There is one more issue to consider if you are moving to a new community. If you have lived in the home where you raised your family for many years, you may not be used to aggressive negotiating when you purchase a new home from a developer.
While you may not be able to get the developer to come down in price, you can frequently get them to throw in a few "goodies" for free or at a discount ... but only if you ask. I was an on-site agent for a developer for several years, and I want to pass on some practical advice to help you get the best deal possible. Before meeting with the agent, practice sounding a little hesitant about making the purchase. Don't express too much enthusiasm for the home when the on-site agent is within hearing distance. Mention other master planned communities in the area that you are considering. Say things like, "I like this plan, but at that price I don't think I would be able to ......" Fill in the blank with whatever you want, such as upgrades to your light fixtures, carpet or granite, a hydrotub, enlargements to the patio, or minor alterations to the design. In order to make the sale, the on-site agent may be authorized to throw in some amenities or upgrades at a discount, or even for free. However, they won't offer to do this unless you ask or they think a few extras could make the difference in whether or not they make the sale. It is certainly worth a try!
To get more ideas about purchasing a retirement home, you may want to order the book "Buying a Second Home: Income, Getaway or Retirement" using this link to Amazon.
While you are planning your retirement, you may also be interested in checking out the index articles below. Each one contains an introduction, plus links to a number of other articles on that topic:
Gifts, Travel and Family Relationships
Great Places for Boomers to Retire Overseas
Great Places to Retire in the United States
Health and Medical Topics for Baby Boomers
Money and Financial Planning for Retirement
You are reading from the blog: http://baby-boomer-retirement.blogspot.com
Photo of homes courtesy of www.morguefile.com