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Housing

Retirement and aging present new questions about where to live when you retire. The option you choose could have a big impact on your retirement budget.

Most people need to make three key decisions about their living situation:

? Geographical location--neighborhood, community, state;

? Affordability--utilities, mortgage, rent, insurance, etc; and

? Type of housing--apartment, house, assisted living, etc.

Location

There are many attractions to remaining in your current home. But when retirement or physical changes cause shifts in your daily schedule and needs, it may make sense to consider moving. Some factors to consider if you're trying to decide whether to move to a new location or stay in your current one are:

? Will I have easy access to transportation when I am unable to drive in the future?

? How much does my quality of life depend on being close to family and friends?

? Does my neighborhood have the services I need and want to have--including a grocery store, pharmacy, my doctor and dentist, perhaps a coffee shop, restaurants, a movie theater?

? On my retirement income, will I be able to afford to stay in my current neighborhood?

? If my current home seems too big or not a good choice for retirement living, are there better housing choices in the same neighborhood or surrounding area?

If you've stayed in your location primarily because of your job, retirement opens the door to relocating in a totally different place. Living in a warmer climate is a common reason that some people move hundreds or even thousands of miles away. Don't rush to do this!

If you're considering a major move, list the features you want to have in your new location. Then visit one or more options to check them out. If possible, spend a chunk of time--such as a month or two--to check out an area you think may be perfect for you.

What to look for in a new retirement location

Here are some of the most important things to consider if you're searching for a new place to live. Add to the list additional items that are important to you.

? Climate ? Convenient transportation--to local activities

and airport ? Cost of living for daily expenses--housing, utilities,

groceries, etc. ? Cultural resources and activities--symphony,

movies, library ? Friends and/or family nearby ? State income and property taxes ? Health care services and facilities ? Part-time work options ? Property tax breaks for seniors or retirees--explore

these if you plan to buy a new home. ? Recreation options

What You Can Afford

Your financial resources make a big difference in where you can choose to live. Even if you don't have a mortgage, can you afford utilities, maintenance, property taxes and insurance on your retirement income? The house where you raised a family may be larger than you'll need in the future, and upkeep may be too expensive.

If you decide to move, what is the best way to use the money you receive from selling your current home? Should you buy a new one, or should you rent? Assess your current and future finances. AARP's online Retirement Planning Calculator may be able to help you cost out some options and come up with an affordable housing budget.

Rental housing: Before deciding to rent, make sure that your budget will cover expenses, such as utilities or condo fees, that come along with it.

Subsidized housing: If your budget is very tight, research federally subsidized housing. The primary program for older people is called Section 202. To qualify, you must be in a low-income household with at least one person 62 years of age or older, or disabled. To find out about this housing, which usually includes services such as meals, transportation and accommodations for people with disabilities, contact the local Area Agency on Aging. You can get that phone number by calling the Eldercare Locator, a national information system, at 1-800-677-1116, or by visiting their website, .

Reverse mortgage: If you are 62 or older, this may be a way to help with expenses. You get a new mortgage and instead of making monthly payments, the bank gives you money as a lump sum, monthly payment, or line of credit. The mortgage comes due when you move, sell, or die. This is a complicated financial transaction and can be expensive, so make sure you understand all the pros and cons before agreeing to it.

Type of Housing

In recent years the types of housing available for aging Americans and retirees have become much more varied. Here are some of the most common options:

? Aging in place: Even if you have medical problems or a disability, you may be able to receive services, such as a visiting nurse, Meals on Wheels and door-to-door transportation, that enable you to stay in your home. To meet needs such as wheelchair access, better lighting and fall prevention, look into remodeling the problem areas in your home. For some families, another option for aging in place may be for parents and children to live together, especially if a separate space or apartment can be created for the older person.

? Assisted living: This type of facility or complex allows you to have your own space, such as an apartment. You also can get help with daily activities such as eating, housekeeping, dressing and bathing. These facilities usually offer three meals a day, laundry services, assistance with medications, and transportation. Assisted living is not necessarily located in a complex that includes a nursing home, and it does not provide extensive medical services or care. There is no standard definition of assisted living, and there are no consistent state standards these facilities must meet. A 2009 survey found that the average monthly cost of assisted living was $3,131, for an annual rate of $37,572.

Tax Tips

Keep these tax facts in mind as you try to decide where to live:

? When you make mortgage payments, you get a deduction for the interest on your income taxes.

? The closer you are to paying off the mortgage, the lower the deduction. Also, if you stop working and your earnings go down, even if you're still paying the mortgage, the deduction will save you less money.

? You do not get a tax deduction for paying rent.

? Continuing Care Retirement Community (CCRC): Sometimes called "life care communities," CCRCs offer a range of housing options on one campus. The options usually include assisted living, a nursing home, independent living, and facilities for people with Alzheimer's disease, and other mental or physical disabilities. The advantage is that you can move easily to a different housing type if your needs change. However,

Your To-Do List:

Use AARP's online Retirement Planning Calculator at money/ to estimate how much you can afford to pay for housing when you retire.

Read basic information, such as population and economic data, for the state and local area you are thinking about moving to on the U.S. Census website at . qfd.

Check out property tax rates from a 2006 survey of the states by the Tax Foundation at taxdata. When considering a move to a new location, ask local officials if there are property tax breaks for seniors, such as a homestead exemption or circuit-breaker. For more information on other types of taxes, see AARP's Money Matters Tip Sheet, "Taxes and Retirement."

the costs can be unaffordable if you have a low or moderate income and assets. Most communities require an entrance fee and monthly payments. These fees can be as low as $20,000 or as high as $400,000. Monthly payments can range from $200 to $2,500. In some places, residents own their living space, and in others the space is rented. In some communities, the entrance fee may be partially refundable when you die or move out.

Learn the pros and cons and process of getting a reverse mortgage on AARP's website, money/personal/ reverse_mortgages/.

Research options for remodeling your home to make it safer and more comfortable on AARP's website, aarp. org/housing/.

Learn how to evaluate assisted living, continuing care communities, shared housing and other housing options on the AARP website, families/ housing_choices.

Check out the average costs in your state for a nursing home, assisted living facility or home health aides at families/ caregiving.

This and other tip sheets provide general financial information; it is not meant to substitute for, or to supersede, professional or legal advice.

? AARP 2010.

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