Where to live in retirement: planning live-in / live-on money
Much of retirement advice covers the amount of money you are going to live on – how much your pension will be, how much you will need to maintain your current lifestyle, when you should start putting money away to cover medical costs, etc, etc. But often little attention is paid to where you will live, and how much that property possession will cost you. Because affordable security of tenure should be top of mind many years before retirement.
You’re going to need two types of money in retirement: live-in money (the price of a cottage, an apartment, a bedsitter, rental) and live-on money (including levies and extras like food, electricity, Wi-Fi, medical, travel, and ultimately frail-care).
Transitioning to retirement – downsizing to fit a new dynamic
People who grasp these two issues, are participating in what is called phased or transitioned retirement. Because the adjustment to retirement can be sudden and difficult to accept, it is much easier to begin the change sooner than the final day of work. Some companies are allowing employees to slowly reduce their working hours and transition to a different home, and lifestyle in a way that gives them time to adjust.
Obviously the purpose is to reduce stress and anxiety that any move or life change can induce. It gives people time to adapt to a smaller home, community living, or moving in with children, getting rid of excess furniture and possession, setting up cost-saving plans, etc. Living with one’s adult children in retirement years can result in significant cost saving, especially considering the high cost of retirement village accommodation.
But you will still have to calculate the cost of frail care accommodation in order to make an eventual, sensible move. Retirement plans should therefore also factor in future costs of security of tenure in an arrangement or facility that will cater for home care, assisted living, and ultimately frail care.
Retirement Estate living
Upmarket villages are booming in South Africa. But you may be dismayed to discover that the price of your family home doesn’t cover the costs of a one or two-bedroom apartment or cottage in a retirement village. The upgrading and development of some of these villages are geared for expats seeking to retire to sunnier climes with dollars or pounds in their pockets.
Understanding this is paramount to your saving and preparation to join the facilities that are becoming increasingly popular because they offer both physical and medical security. The traditional ‘old age home’ holds little appeal for the more independent, healthy and fit older individual, and modern retirement villages are renovating to tick all the boxes for those looking for a combination of community, amenities, and care.
With most retirement villages being structured on the basis of life rights, buying into such an estate is more affordable than taking ownership of a single property. In a retirement village environment you are not responsible for maintenance or upkeep of the property.
However, planning to buy into one of these facilities is something you must begin to plan reasonably early in life – at least in your forties. You need to explore all the options and costs, and then set up a budget to ensure you will have the ‘live-in’ money required. It is advisable to put your name on the relevant lists as soon as possible in order to ensure that you keep up to date with the changes and offers of accommodation.
Move younger – and grow older when you are already settled
It is generally more sensible to move before one becomes too elderly to manage the stress of moving, planning, packing, and travelling. And also to ensure that you remain in charge of your own financial decisions. The concept of ‘aging in place’ just makes sense on all levels. You need to take a long-term view and ensure that your new home will accommodate your changing needs over time.
Retirement villages offer residents the advantage of being able to live independently in a freestanding home while still able to do so, secure in the knowledge that should they need to transfer to assisted living or frail care, the option to do so within the village where they are settled is fully available.
Knowing the place where you will be, means easier planning for the money you will need
Where you live during retirement can significantly affect your financial situation and quality of life. Before making your choice to move in retirement, evaluate your current living situation and your retirement funding plans. Evaluate affordability well in time – including your cost of living, taxes, amenities, and access to health care.
You will need to know how to stretch your retirement funding, and to calculate for increasing property prices, as well as any unexpected changes in financial circumstances such as the death of a spouse or onset of serious illness.
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