*Include the 70/40 conversation.
*Research options considering lifestyle choices and financial considerations.
*Plan for change as needs may vary every 5-10 years.
Planning ahead is difficult for all of us as the uncertainty is overwhelming and it’s most difficult to face the aging process. This doesn’t mean that we shouldn’t try and think about the different scenarios we may face in five to ten year increments, and consider what lifestyle and living arrangements we would prefer at each point. Henry Cisneros, the former Secretary of Housing and Urban Development, has written a book, Independent for Life. He states “It is my belief that the physical environment in which older people live – with the security, stability, comfort and psychological nurturing it offers has a lot to do with staying healthy and independent longer:” The main takeaway is ” where we grow old matters.”
Whether we are 58 or 85 most fail to plan. In a recent FoxBusiness.com segment Suzanne Schmitt, Vice President of Family Engagement at Fidelity, mentioned the consequences of failing to plan. Individuals and families are at a greater risk for financial fraud, potential loss of assets and at the least chaos and confusion, she stated. Decisions become emergency-generated, so it is important to at least be familiar with your family’s plan for housing, finances, healthcare, caregiving and end-of-life preferences.
Family planning discussions are good places to start, and popular thinking is that the 70/40 conversation is an important starting point with parents in their 70’s and their adult children in their 40’s. At 70+ parents can most likely voice their detailed wishes and desires on how they would like to spend their senior years, before health starts to deteriorate or crises arise.
These discussions often center on whether the parents would move to a more livable city or retirement community, downsize to a smaller home or apartment or remain in the family home. Health and safety considerations, caregiving costs and affordability issues should be touched on.
When choosing where to retire there are many surveys which rank the best places to retire. Two such sources are The Wall Street Journal 4/4/16 Encore Section features their recommended list and the Milken Institute’s “Best Cities for Successful Aging” can be found at successfulaging.milkeninstitute.org. Retiring in a city that is committed to the growing senior population and their continuum of needs is most important. The children will often have input on this choice based on the proximity to their homes.
Most adults would like to remain in their home versus downsizing to a smaller more manageable home or apartment. It is good to list ways to adapt their home for safety and ease of access as the parent ages – ramps, grab bars, zero entry shower and baths, shower seats, brighter lighting, non-slip rugs – to mention some helpful features.
Also thought should be given in this planning discussion as to whether there will be funds for the maintenance and unexpected repairs necessary to keep the home comfortable and out of disrepair. To gain a true picture of funds needed the taxes and insurance need to be figured in. Projecting future major repairs and upgrades such as a new roof or heater can help ensure funds are available as needed.
There are options for homeowners who need access to funds to pay expenses and remain independent and these should be researched:
– reverse mortgages (homeowner must be 62 years old. Check with your financial advisor)
– home equity line of credit
– single-purpose loan (check local Area Agency on Aging as these loans are excellent alternatives for home repair offered by state
and local governments)
– sale/leaseback plan – family member or friend buys the home from the senior who then can remain in their home as a tenant with
– sale of the home
– property tax relief program
Other financial products such as annuities, investment vehicles or insurance products can generate dividends or cash flow that can cover these expenses. Advance planning can provide the funds to allow the senior adult to remain in the comfort of their home and families should check for information from reliable sources with the credentials and references for sound investment decisions.
Many families have created the perfect setting for their parents to live out their years in the family home complete with meals delivered, car service as needed etc. Without enough social interaction , however, the parents become very lonely with family just dropping in to take care of necessary “duties” rather than providing good company. It has been recognized that social isolation has become a major cause of deterioration and disease.
Family discussions and planning sessions are great places to start thinking about options. Next researching the options can help bring about informed decisions. Acting on these decisions through this roadmap for housing, as we age, can provide guidance and help needed to prevent wrong decisions made in the midst of crisis and confusion. Where we grow old matters – so plan with your true wishes in mind!
Helen Keit – Licensed R.E Broker, Certified Senior Advisor – 917-887-4924 or Helen.Keit@KW.com
Resources: Publications by The Society of Certified Senior Advisors