RETIREMENT 103

In our last installment on this subject, we offered a rough rule of thumb to ascertain how much you need for retirement.  That figure was 10x your last year’s compensation.  Don’t forget, you have to include your liabilities as a deduction to your assets as well.

Remember to also include the value of your home or condo, as well as the capitalized value of your social security and any other monthly income.

If you’re still a little short, consider working another five years, particularly true if you like what you do.  Working another five years gives you the opportunity to save more and increases your social security benefits.

Now, let’s talk about where and how you may want to live.

There is a growing segment of real estate options for adults 55 and older because they offer a lot of amenities and advantages.  At the very least, they are worth exploring.

Yes, you may want to stay right where you are in your own home and/or apartment.  You’re comfortable there.  You know where everything is in your neighborhood and nearby.

Starting out in a whole new environment may seem a bit scary at first, but it’s worth checking out and comparing the advantages and perhaps disadvantages senior housing offers compared to where you are now.

There are three basic cost models in senior housing and several iterations of each.  Most communities are nicely landscaped with well-groomed outdoor areas and make a welcome first impression.

Model No. 1:  Substantial down payment investment (between 500M and 1,000M) as well as monthly carrying charges.  In the event of your moving out or passing, between 75% and 90% of your initial investment is returned.

The actual cost will depend on the size and location of the unit you choose.

Model No. 2:  Similar to Model No. 1 except the initial investment is lower, but the monthly carrying charges will be higher.

Model No. 3:  Much lower as an upfront investment, but a straight rental agreement.

The principal decision should be based on how you want to live if you have the resources, not on the numbers as a real estate investment.

Some communities are right in the heart of the city while others are more spread out in the suburbs.  Depending on the specific community you find, you’ll see some of the following amenities provided or available as part of their package:

  • One, two or three meals per day provided
  • Available eating facilities for pay
  • Electric and gas utilities
  • Cable TV and WiFi
  • Swimming pool(s) and Jacuzzi
  • Fitness facility with staff trainers
  • Transportation to stores, doctors and entertainment venues
  • Affiliation with a nearby college or university
  • Numerous classes, clubs and organizations for special interests
  • Wellness monitoring and/or nurses on duty
  • Group trips to events and travel
  • Golf and/or tennis

One of the big advantages of senior housing is that it offers a built-in support system, as well as a social community for those who may not have one.  That’s a real value.

If you compare the costs of what you pay now to what’s included in the new senior community, it can be a little more reasonable than you think.

Another aspect of exploring these facilities to consider is the type of ownership and management.

Some older communities especially are set up as condominium associations where the homeowners, through a Board of Directors, are responsible for the management of the community.

A great many of the newer communities are owned and operated by private companies.  Because of the normal turnover, they have more incentive to keep the facilities up to their standards.

If you decide to explore one or more senior housing communities, you should check out which amenities are provided and consider a few other questions:

  1. How far is the nearest emergency room?
  2. When was the community built?
  3. What are the demographics regarding age, single or married, religious preferences?
  4. Are religious services held on the premises and/or how close?
  5. How long is the waiting list?

Well, that pretty much sums up most of what we learned about retirement.  I wish you a happy and fulfilling new life.

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