WHERE TO RETIRE

When we get closer to retirement, it is a good idea to think about where we should live during our retirement. There are a lot of factors to consider when making our plans. You may wish to remain as close as possible to our immediate family members, or in the alternative, live someplace where your family members will enjoy coming for short visits rather than seeing them every day.

No one place can be the best in every category, but depending on which factors we rank the highest, it is possible to narrow the choices down to a short list of possibilities. The list of factors should at least include the following:

What Is The Local Area Cost Of Living?

How Will Buying A Home vs. Renting Affect Your Cash Flow Picture?

What Is The Income Tax Burden Where You Plan To Move, Including Taxes On Social Security and Pension Income, Property Taxes, Sales Taxes, and/or Inheritance Taxes?  

What Resources Are Available That Can Reduce Your Personal Cost Of Living In The Communities You Are Considering?

What Are The Weather Conditions Throughout The Year?

Availability Of Public Transportation?  

Where You Can Live The Longest And Healthiest Life?  

What Is The Overall Safety Levels In The Community You Are Considering?  

Availability Of Medical Services For Seniors?  

Senior Lifestyle Amenities And Choices?  

Whether Access To Travel Opportunities Is A High Priority?  

Where You Can Best Fit In To Provide For Your Mental Wellness?

Where Can You Continue To Do The Things You Currently Like To Do Or Expand On Your Hobbies And Activities?  

Whether You Will Fit In Best In A Large Metropolitan Area Or In A More Suburban or Rural Setting?

For Those Who Wish To Work During Retirement To Supplement Their Income Or Maintain Work Place Relationships, What Are The Job Prospects For Seniors In The Areas You Are Considering?

I will be writing a series of articles in the future on each of the factors set forth above, and hope that you will continue to visit my blog site in order to put each factor into perspective as well as to make your own comments related to each discussion.  For now, please think about how each of these factors would affect your decision and rank them in order of importance to you.  You will then have a factual framework from which to make your determination on the best local and type of community in which you would like to spend your retirement.

Read More

Home Care vs. Assisted Living Community

One of the big decisions seniors and/or their children have to make is: whether it is better to spend their money on home care, or toward the cost of an assisted living community?  Finding an answer to this dilemma is not as easy as one might think.  It is also always clouded by every senior's fear of possibly losing control of their life decisions, and their memories of the old style convalescent hospitals that their parents unfortunately had to suffer through.

My own mother had a pathological fear of going into a facility like the one that her cousin used to work in.  Even when her dementia had progressed to the point that she was not sure what was going on around her, she would often awaken in fear, citing a dream where nurses carried her off to Stockton, where her cousin had given her a tour of the convalescent hospital where he worked way back in the fifties.  She never shook this fear off, and spoke of it right up to the time she passed away.

The good news is that todays assisted living communities have no similarities with the old convalescent hospitals our senior loved ones have in mind.  A closer comparison would be to the vacation resorts we all enjoy visiting, stocked with good food and lots of activities to enjoy with our friends and family.

Every senior's first choice is to stay at home as long as possible, regardless of the true costs associated with this decision.  As long as a senior is healthy enough to take care of all of their own needs, staying in their home is great.  However, as soon as a senior gets to the point of loosing their ability to physically do all of their own chores around the house, and/or their mental capacity to recognize what needs to be done and when starts to wain, it is time to do a no nonsense evaluation of the physical, phycological, and monetary costs of maintaining that senior at home.

The most important factor is always the health and safety issues each senior is facing currently, and an evaluation of how those issues will impact their future care needs.  The second is their monthly budget while living at home plus the added incremental costs of home care over time.  You will then have a basis to compare those costs to the monthly expense of moving into an assisted living community now, or sometime in the near future, as the senior's care needs increase.

Home care costs vary from $18 to $25 per hour, and most home care companies have minimum daily requirements of 2 to 4 hours per day.  That is equal to $36 to $100 per day minimum just for the home care component of your monthly expenses, or $1,080 to $3,000 per month.  24-7 homecare pumps these amounts up to $432 to $600 per day, or $12,960 to $18,000 per month.  You can live in an assisted living community for a fraction of these costs, usually from between $100 and $250 per day, and have 24-7 caregiver availability in the bargain.  In addition, see your CPA about the deductibility of some or all of the cost of living in an assisted living community.

Even if a senior's home is paid off, there are still significant costs involved in maintaining any home.  These costs escalate more quickly if the home is more than 15 or 20 years old.  The most important decision tool you can use in planning your future is an accurate budget of current costs of maintaining your home plus the normal monthly living expenses you are facing each month.  With this in hand, you can then prepare comparative budgets for staying at home with escalating home care costs included, and, in the alternative, a budget for moving into an assisted living community.

Although we all hope that our retirement preparations are adequate to carry us through until we pass on, and hopefully leave a nest egg for our children, the reality of seniors living a lot longer these days often leads to them outliving their available retirement funds.  With a little thought, we can often help stretch our loved one's available assets out to cover a longer period of comfortable living than they will likely be able to enjoy if they stay at home too long.

To start with, property taxes are the equivalent of paying rent to the government for the privilege of owning and living in your private home.  The average property tax rate in California is .68%.  This means that a home with a tax value of $300,000 requires you to pay $2,040 annually in taxes. That works out to $170 per month.  Add to that all of the basic costs of living in central California, and you start to realize the real costs of a senior continuing to live at home as additional home care costs increase over time.

Preparing a true monthly budget, as I mentioned above, is critical in the decision making process for every senior.  The following format for a monthly budget is provided to give you the framework for analyzing the true costs of remaining at home versus moving into an assisted living community.  Be truthful with yourself when you plug in your numbers, and you will certainly find your way to the best solution for yourself or your loved ones (Those items with a "*" will be eliminated or partially reduced if you move into an assisted living community):

DESCRIPTION                                                 AMOUNT
1. Mortgage/Rent:
2. Property taxes*:
3. Food for preparation at home*:
4. Dining out periodically*:
5. Vehicle repairs*:
6. Vehicle operating costs*:
7. Vehicle insurance*:
8. Utilities*:
9. Cable TV*:
10. Internet access*:
11. Phone service*:
12. Water & garbage collection*:
13. Gardening*:
14. Appliance repair & replacement*:
15. Plumbing fixture repair & replacement*:
16. Roofing repair & replacement*:
17. Periodic interior & exterior painting*:
18. Flooring repairs & replacement*:
19. Miscellaneous general maintenance*:
20. Cleaning and/or maid services*:
21. Entertainment activities:
22. Credit card payments:
23. Home insurance*:
24. Home care costs*:
25. Miscellaneous additional expenses*:
26. _____________________*:                                               
TOTAL:

Once you have a clear picture of the actual expenses you are laying out every month to maintain yourself at home, you will be ready to analyze how to extend your available funds to cover your needs for the rest of your life.  This may include selling your home and applying the proceeds toward your stay in an assisted living community, or renting it out to provide an additional monthly income to help offset those costs.

Think about the points made above and the possibility of stretching your assets out to provide for a safer and more secure life in an assisted living community.  If you want to take a couple of tours to get a better idea about what it is like to live in an assisted living community, give me a call and I will help you schedule a variety of facilities that may meet your needs.  I can save you hundreds of hours trying to learn what I know about the industry and each of the facilities in your area.

Read More