Do you remember when 50 was waaaay old? I sure do. Now it seems rather youthful eh! Anyway, one of the major decisions facing us “older folks” is where to live in our later years.
Anyone over 60 (not me – yet) who has grown children should be developing a plan for where to live when they’re 75, 85 and even older. Like solid retirement-investment programs, your housing plan can be sidetracked by all sorts of things like recessions and personal issues. The downturn in the Seattle housing market and nationwide of the last few years doesn’t help, either.
When it comes to housing decisions, it’s been shown that people, who thought about the issue and planned accordingly, fared better when it came to housing decisions. In a 2009 study, Boston College’s Center for Retirement Research analyzed information about moves made between 1992 and 2004 by people who were 51 to 61.
The study looked at all moves made during the period and reviewed the reasons people gave for relocating. Those who tended to be in control of their own move were classified as planners. They tended to move to get a better location or home because of retirement or financial reasons.
People who said they had been forced to move because of family or health issues — the death of a spouse, a divorce, poor health — were classified as reactors.
Having a financial cushion is, of course, a big help in providing some control over the timing of their move and the ability to carry out their plan even when things go less than perfect. It should come as no surprise that setting aside money to complete a move should be part of your plan. But so should doing some homework:
- Where do you want to live?
- What’s the housing market like there?
- How will the cost of homeownership change in your new home?
- Can you afford these outlays in retirement?
- What’s the minimum amount you need to get from selling your current home?
- What’s the likelihood of receiving this amount, and are there home-improvement projects you need to undertake to increase the net proceeds from selling your home?
In the study, planners tended to have choices and fared better even if confronted with the kinds of problems that forced reactors to move. Reactors didn’t have the same range of choices.
“Those moving for retirement reasons are more educated, better off financially, more likely to be married and less likely to be in poor/fair health,” researchers said. “Those moving for health or family reasons have the lowest educational-attainment level, the highest incidence of poor/fair health and the lowest level of income and wealth, as measured by Social Security, housing and nonhousing wealth.”
Reactors lost an average of $26,000 in home equity when they moved. That’s explained, in part, by the fact that a third of them did not buy another home and either rented or moved in with relatives.
Planners, by contrast, gained an average of $33,000 in home equity when they moved, and only 18% of them did not buy another home. They had more choice and control and wound up improving their financial situation.
Older people who felt forced to move tended to include those who were recently widowed or divorced and those diagnosed with a new health condition, researchers said. “Surprisingly, the other shocks — being hospitalized or reporting worsened health, entering into a nursing home and losing a job — do not significantly impact the probability of moving in these households with at least one shock. Thus, again, it seems that family structure is a very important factor in these households’ decisions to move.”
During the period studied, about 30% of older people moved out of their homes, and major factors cited were family considerations, financial matters, wanting a better location or type of house and retirement.
Health was not cited as a major cause of moves, but researchers speculated that this might be because even the oldest people included in the study were only 73 when it ended.
Among people who moved, about 60% stayed within 20 miles of their former home, 20% moved up to 200 miles away and a comparable number moved farther away. A mass exodus to sunnier locales was not a major driver of relocation decisions. Aging in place continued to be the overwhelming first choice.
Many of our clients are facing some of the issues I mention here. Many have parents or others they really care about. If you or someone you think could use our assistance, please introduce them to us. We’d love to help.
“We estimate that the time to complete a short sale will decrease by approximately 50 percent to 75 percent,” as a result of the changes, writes Tracy Mooney, Freddie Mac’s EVP in a recent blog post.
d as it’s going to get. If the lender forecloses, it will incur additional costs and delays, and might have to evict its borrower.
MyNorthwestHomes.com 