Where to Retire? Persistence and Realism Are Key to the Decision
Deciding where to live after retirement is a complex and emotional decision. As a result, advisors need to talk their clients through the various costs involved and be persistent as the clients’ needs shift, InvestmentNews writes.
Because it’s such an emotional decision, often involving the sale of a family home or moving far away from a familiar community, advisors should be ready to bring in the client’s relatives or even the family physician, according to the publication. The clients themselves may often change their mind about where they want to live in retirement and with what level of assistance — and not bringing up the decision for fear of angering the client is “a mistake,” Lauren Locker, founder of Locker Financial Services, tells the publication. A diagnosis of impairment — such as Parkinson’s or Alzheimer’s, for example — can make retiring clients who originally wanted to live on their own consider assisted living, say advisors who spoke to InvestmentNews.
Cost concerns must be addressed realistically, because both assisted-living communities and staying at home can get expensive, InvestmentNews notes. Continuing-care facilities cost between $100,000 and $1 million up front and thousands in monthly fees, according to AARP estimates cited by the publication. Meanwhile, staying at home may require some health-aide and homemaker assistance, which together add up to an average of more than $90,000 a year, reveals Genworth Financial’s 2015 Cost of Care Survey cited by InvestmentNews. Meanwhile, even though 78% of people over 45 surveyed by AARP last year said they would “strongly” prefer to remain in their home, many of them will need to move to continuing-care communities. But there simply isn’t enough space for everyone there, InvestmentNews points out. Currently, there is only enough capacity in the sector for 600,000 people, LeadingAge data cited by the publication shows — while 44 million people are 65 and over today, with the number projected to reach 98 million by 2060, according to Administration on Aging projections cited by InvestmentNews.
Whatever the choice, retiring customers should consider all available income streams and savings opportunities, advisors tell InvestmentNews, from downsizing the home and moving to a cheaper part of the country to even taking out reverse mortgages — long frowned upon because of the high fees associated with them and the risk of losing the home. Because of reforms by the Department of Housing and Urban Development and the Federal Housing Administration that require financial assessments of a client’s ability to pay, reverse mortgages have become more popular, although most advisors still recommend using them only as a last resort, instead recommending that clients take out home-equity lines of credit, InvestmentNews writes.