Where to Live During Retirement

Many older Americans face major challenges due to the cost and availability of housing. In A Place to Call Home, Orion Bell outlined these economic challenges related to housing, and the growth in homelessness and housing insecurity. His article is emblematic of the ASA Economic Security Advisory Council’s focus on the crucial economic issues of housing and well-being in aging.

The third in a three-part series (read articles one and two here) on housing costs, climate and economic insecurity, the article below summarizes key decisions related to retirement well-being and housing and offers tips for moving forward.

Real Life Challenges Facing Real People

Last year, a friend of mine called looking for advice to help a friend—an older adult who lives nearby and is a widow who has dementia.

The family member designated to help her lives far away and when he asked her if she needed help, she said that all was good. That wasn’t an accurate assessment of her situation, but the family member had no other information.

She lives in a condo with a mortgage. She had stopped paying her bills on a timely basis and did not seem to remember how to pay them.  There was a risk that the unpaid mortgage would lead to foreclosure and loss of the condo.

My friend was looking for help so that her friend would not become a victim of foreclosure.  My friend found someone to help solve the immediate problem, but there were open questions about how much more help she would need as her dementia progressed or how to get it.

A team comprising a professional money manager, a family member who lived far away and my friend worked together to locate unpaid bills and get them paid, and to establish a better system for managing her day-to-day bill payment. They also began to focus on what would need to be done as her dementia worsened.

Lessons learned: When someone is losing the ability to manage their finances, don’t rely on what they say to figure out if they need help. 

Individuals who are far away and designated to help with day-to-day matters need support from those who are on the scene and can see what is happening or they need to take the finances over

Impacts of Housing and Climate on Longer-Term Retirement Well-Being

Economic questions and housing: The first question people should ask themselves is whether a housing option is affordable in the longer term. If the answer is no, it is important to consider the following:

  • Are there viable lower cost options to explore?
    o Lower cost options might include smaller homes, housing in a less expensive area, home-sharing or moving in with family or friends.
    o Lower cost options may also include manufactured homes, ADUs and tiny houses.
  • For homeowners who can afford their homes: If a mortgage remains, should it be paid off or modified?
  • Would a reverse mortgage help the owner remain in the home and make it more affordable?
  • How do housing costs and/or assets fit into the total financial picture?

The Society of Actuaries publication, Where to Live in Retirement, lays out more questions to ask and issues involved in choosing retirement housing. The Consumer Financial Protection Bureau offers a variety of resources to help people evaluate and use reverse mortgages.

Housing is an critical factor in the lifestyle and well-being of retirees. Location affects access to family and friends, medical care, transportation, recreational opportunities, climate, safety and more. People who have lived in a house or community for a long time often wish to stay there. They find comfort in the familiar surroundings. But some locations and communities are age friendly and others are not. Some housing includes access to or provision of support services.

Housing needs evolve as more support is needed. While retirees say they want to remain in their homes, that doesn’t mean the homes will work when their needs change. The Society of Actuaries publication Late-in-Life Decisions Guide, lays out issues related to housing as needs change late in life. These include the ability to manage routine upkeep, maintenance and yard work, accessibility, and access to needed services and support. The guide also discusses access to healthcare and transportation. Access to healthcare varies by geographic area, with some areas having limited access to primary care, specialty care and hospitals. It can be particularly challenging for individuals in plans with few options nearby that are within network.

‘While retirees say they want to remain in their homes, that doesn’t mean the homes will work when their needs change.’

Accessibility and safety. Many older people develop mobility problems. Housing with stairs is not suitable in this situation. Housing with a significant number of stairs can be made more accessible via ramps, and handrails, grab bars and chairs in showers can make bathrooms safer, plus fall hazards need to be removed throughout the house. Stair lifts and elevators are options in some houses with full flights of stairs.

Senior housing: Ages 55 and older communities may offer access to a variety of housing and support services. Some have lower taxes. Services offered may include meals, transportation, home maintenance, activities, and individual help with activities of daily living. There are various levels of support in such housing, and different communities offer different packages. Levels of support include independent living, assisted living, memory care and skilled nursing care. Continuing care retirement communities combine independent living, assisted living and higher levels of care in one package.

Family members and friends helping others: Family members, including younger retirees, frequently help their parents or other family members. In addition to paying attention to their own situation in choosing where to live, they should consider issues of location and climate for those they care for to minimize the chance that their loved ones will be put in difficult situations because of climate events.

Community risk: In addition to climate and natural risks, communities can be subject to a variety of other risks. For example, they may be near hazardous waste sites, be in or near areas where there is a lot of crime, or major employers may vacate, leaving the community with many unemployed people and a big drop in services. Such areas may also lack access to healthcare and/or fresh groceries. Also, on occasion condominium associations and trailer parks go bankrupt.

Tips for retirees, people nearing retirement and their helpers or caregivers:

  1. Carefully consider the climate risk in the area when evaluating places to live.
  2. The total picture should be considered when deciding how much of a person’s assets should be invested in their home. Assets should be diversified.
  3. Housing choice should take into consideration both the present situation and what will happen if a person develops limitations.
  4. Homeowners and renters should be careful to obtain all possible insurance coverage needed (including flood insurance if appropriate) and should take care to get a reputable insurance carrier. Extra care is advisable if a high proportion of assets are invested in the home.
  5. Feasibility of plans for emergencies, including for evacuation, should be considered when evaluating places to live.

Older adults must consider many factors such as cost, availability and insurance coverage when choosing their desired housing, along with potential climate-related or location-related risks. We hope this series of articles has given you some food for thought and helpful resources.

Anna M. Rappaport, FSA, is an actuary, consultant, author and speaker, and a past-president of the Society of Actuaries. She has served on several government advisory committees. Most recently, in 2010 she was appointed to the Department of Labor’s ERISA (Employee Retirement Income Security Act of 1974) Advisory Council.

Photo credit: Shutterstock/Lukas Jonaitis