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Retirement concerns: Where to live, medical costs

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With approximately 10,000 Baby Boomers – America's largest generational group – transitioning to retirement each day, the pressures to plan for where they will spend their retirement years are significant, according to the Certified Financial Planning Board.

Soon-to-be retirees must ask themselves where they will be the most comfortable: remaining in their home, also known as "aging in place," or moving to a dedicated retirement community.

CFP Board's Consumer Advocate Eleanor Blayney said there are key considerations retirees should take into account when deciding on living arrangements in retirement.

"Americans overwhelmingly prefer to stay put in retirement, remaining in their homes," said Blayney. "Some have no choice: costs of a dedicated retirement community may be out of reach. Others simply resist change, which is always difficult to navigate as we get older and set in our ways."

In her latest contribution to, Blayney shares some important factors to consider when deciding whether to not to "age in place."

  • Living arrangements: Married retirees or singles living at home with other family members are generally good prospects for aging in place. The primary issue here is safety. As we age, we lose physical acuity, including our vision, hearing, and balance. 
  • Suitability/adaptability of the home to physical needs: Open floor plans and one-level living are obvious wants and eventual needs for most retirees. As hale and hearty as you may be in early retirement, you need to be realistic about your physical needs in the future. 
  • Services in community: How retiree-friendly is the community? Is it easy to get around by means other than driving? Are good medical providers and facilities easily accessible? Some communities with a high concentration of retirement-aged residents are designated as "NORCs" – or Naturally Occurring Retirement Communities – with special services for the aging-in-place retiree population.

Blayney also advises that when making the decision to "age in place," financial costs must be carefully evaluated. Retirees determined to stay in their homes need to plan for how they will pay for needed services such as in-home caretaking. Some of the major options to ensure retirees can afford these expenses include:

  • Long-term care (LTC) insurance: Most long-term care policies today provide coverage for in-home caretaking services. Unfortunately, a 2014 Genworth Financial study found very few Americans have LTC insurance despite the high likelihood they will eventually need care. 
  • Reverse mortgage: Rent or mortgage payments, property taxes, and depreciation may make staying in the home while receiving LTC services more expensive than the annual costs of a nursing home or continuing care facility. Reverse mortgages have, fortunately, become a more mainstream financing option and less expensive. However, retirees should still be mindful of the pitfalls involved, such as possible loss of the home if the stipulations of the mortgage agreement are not met. 
  • Medicaid: A last-resort option that few retirees like to think about is Medicaid. Unlike Medicare or private health insurance, Medicaid does provide for caretaking services in the home, but only for those aging-in-placers who have exhausted most of their net worth. 

"While aging-in-place is the preferred option for most retirees, it isn't necessarily the best option from a financial point of view," says Blayney. "It requires taking a realistic and non-sentimental view of the potential costs that may be incurred in retirement, and comparing them to the costs of other less familiar and comfortable options."

Medical costs biggest worry about retirement

A recent report showed that high medical expenses are Americans' biggest financial worry about retirement. It said that 28 percent of Americans gave this response; the highest-income households (over$75,000per year) are actually more concerned about high medical expenses than the overall population. Running out of money is the biggest fear for millennials (18-29 year-olds) and a close second overall.

One-third of Americans say they can't save more for retirement because they have just enough money for their day-to-day expenses; 14 percent blame other family obligations and 10 percent lay fault with their student loan debt (millennials were more than twice as likely to give this answer than other age groups). Also, 29 percent are satisfied with the amount they are currently saving.

Working Americans are realistic about Social Security's role in their eventual retirements: just 13 percent expect it to account for all or most of their retirement income, while another 14 percent expect it to account for half their retirement income. About one in four believe they won't get anything.

"The average Social Security payout is only around$15,000per year, so people are realistic to think they'll need to supplement that income," saidSheyna Steiner, senior investing analyst at "But despite all the gloom and doom about the future of Social Security, most Americans are optimistic that they'll get at least something from the program. That even includes millennials – 63 percent of them think Social Security will fund at least some of their retirement several decades from now."

The survey was conducted by Princeton Survey Research Associates International and can be seen in its entirety here:

PSRAI obtained telephone interviews with a nationally representative sample of 1,003 adults living in the continentalUnited States. Interviews were conducted by landline (501) and cell phone (502, including 284 without a landline phone) in English and Spanish by Princeton Data Source fromJanuary 22-25, 2015. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error for the complete set of weighted data is plus or minus 3.7 percentage points.


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