One question I am often asked by Seniors, “Should I age in place, downsize or rent?” This past month, during the Senior Social Hour I host every Monday morning, the hot topic has been about the proposed increases in property taxes and how Seniors can afford to live in their homes.
Often this decision is based on finances and health. It is also based on what social support a Seniors has. Basically, this is a very personal decision based on many factors.
If a Seniors is living solely on Social Security, this may be a breaking point for them; especially if they are living alone. Their advisors may have told them to spend down their savings in order to qualify for elderly waiver or medical assistance. Or they may be planning on having their reverse mortgage to cover the costs. For many Seniors who are in the “Forgotten Middle” are looking at their homes as their primary income source for their assisted living or memory care costs. For Seniors who are active and not at that stage in their life are excited to learn could sell their home for hundreds of thousands more than they expected.
The question then becomes, what does it cost to find a new home? Moving from a 4 bedroom home to a 2 bedroom town home, or condo has been the plan. These are highly desired homes for those in their 20’s and 30’s. Competition and living in closer proximity to those who have different lifestyle choices can be a difficult transition. Rent in Senior Communities average $2300 or more a month. If your home sold for $400,000, at $2300 a month, assuming the rates never increase, would cover rent for 14 years. Keep in mind, this does not include other living expenses. Looking long term, this may not be the best solution either.
What other options do Seniors have?
- Research reverse mortgages to see if it can help you. Take into consideration that some funds are needed to cover future taxes. Also be aware that your heirs will have to pay back the funds spent during a reverse mortgage if they want to keep the family home.
- Investigate programs or funding from the local community or non-profits to assist with property taxes. Some states will place a lien on the property for unpaid taxes. You will not be evicted from your home if the mortgage is paid. Unpaid property taxes will need to be paid back by your heirs. Maybe you can request help from family members cover the difference in your taxes.
- Move in with family. If you choose to do this, discuss how you can pay your family for your expenses. Many adult children balk at taking money from their parents for living with them until I remind them that they may need to leave their job to provide for your care which means lost income, benefits and retirement savings. Families can be self paid, or paid by insurance (life or long term care insurance) up to $33 an hour, to provide care for their family members. If interested in learning more, contact Our Family Encounter to talk about a Family Care-giving Agreement.
- Rent a room or a floor to another Senior (“Golden Girl”-style) or to a small family. This helps with home maintenance and having someone around so you are not living in isolation.
- Move to an apartment, but rent your home for the income instead of selling. This would cover the cost of your rent and living expenses. If interested in this, contact Our Family Encounter and discuss with your financial advisor.
- If you have properties, investments or other assets, consider turning yourself into a Limited Liability Corp so you can have the support and funds to cover your care and housing costs, while passing your property to your heirs. This is an innovative solution that is a hybrid between the Medicare program to support family members and a Family Limited Partnership. It allows Seniors the ability to age in place while getting care from loved ones. It takes planning and guidance from professional advisors. More details are covered in my book, Last Life Lesson: A Guide for Seniors and Their Families. You can download an eBook or order a book from my website. I will work with you to create a solution and bring a team of advisors to you.
Our goal at Our Family Encounter is to provide tools and support for Seniors and their families so they can find a solutions for challenges facing them as they age. No one should age alone.