Instead of Downsizing, Consider “Rightsizing”
The difference between downsizing and rightsizing is not just linguistics and semantics, the difference really is that downsizing is more reactive, and rightsizing indicates a proactive approach to organizing your lifestyle and finances when you retire or when your children leave home to start their adult lives.
Rightsizing is a concept and phrase that companies coined in the 1990’s when they were reducing the number of employees in their workforce through careful planning and organizing of tasks, skills, and outcomes. When it comes to planning for your empty-nest, a proactive approach to transitioning from a home you’ve lived in for years and considering what is included in the rightsizing approach can help facilitate a positive outcome for the long term, both emotionally and financially.
Aging in Place
According to the National Council on Aging (NCA), 75% of adults aged 55 and older plan to “age in place”. This makes sense as we see the same scenario to be true for many of our clients who intend to stay in their own homes rather than moving to assisted living facilities or nursing homes. We believe that there are several ways to maintain this objective financially speaking. Some possibilities for rightsizing are moving to a smaller home that is still your own, getting a roommate who will share the costs of your home expenses, moving to a co-op community in which you are living independently in your own home but share community spaces or lastly, and certainly not for everyone, utilizing new vacation rental technologies like AirBnB to generate income from your home not and again.
In the past, people could rely on their pensions, Social Security and Personal Savings and Investments to satisfy the whole picture of their retirement income. Very few people have pensions anymore, and we are establishing new and different ways to fit all of the pieces together. Utilizing insurance vehicles and reverse mortgages are two common approaches to staying in your home without breaking the bank.
Home Equity Conversion Mortgages or reverse mortgages were once considered a last resort and a poor choice for retirees who could avoid the solution. With different regulations now in place, reverse mortgages are a less dangerous and more sensible option which can provide for a steady monthly income or allow a line of credit to grow. While this option has become more palatable and sustainable because of insurance protections, beware of television and radio ads selling these and other financial products. Go to your trusted advisor with questions about this and other products you hear about and you will receive detailed information as well as a perspective on whether it is the right fit for your specific needs or if there is a better route for you to take given your unique circumstances.
Activities of Daily Living
While many people wish to stay in their homes until death it is important to be realistic about some of the risks inherent in the aging process. Things like inhibited mobility, bathing, meal preparation, dressing, continence and social engagement are all critical aspects of daily life that must be considered in the overall plan. Considering things like stairs, the type of bathtub you have, the proximity of the grocery store to your home, the availability of delivery services to your home, your physical health and the risks of its deterioration and how often you will continue to have frequent interactions with others into account are important to your well-being as you age regardless of where you are living.
Fortunately, we live in a time and place where eldercare services are available from a variety of sources from delivery services to in-home nursing care to companion services. While it is wonderful to have family and friends to be there to care for you it is important to take into account that they may not be able to provide you with the care you need as you age. These types of nonprofit and for-profit organizations can fill in the gaps that family and friends may not be able to satisfy.
When Home is no Longer an Option
If and when the time comes that living at home is no longer an option, assisted living communities are varied and copious. As the baby boomers age, more and more facilities have popped up all over the country. This boom has created a variety of options for people interested in Assisted Living to choose from. Most have single apartments or townhomes, community centers, and recreational activities. There are many with pools and fitness centers, campuses with walking trails and gardens. The amenities coupled with skilled care prepared meals and on-site markets and pharmacies make assisted living communities a good choice for those who need a little bit more help in their daily activities.
If more regular medical attention is needed, then the next choice is a nursing home or rehabilitation center. This alternative is likely to be more confining (shared room, set hours for things like meals and activities). Alternatively, there are full-service communities called Continuing Care Retirement Communities which host a wide range of options for how you live and what level of care you receive in one place.
If a community living environment makes sense for your physical and financial needs, you can compare them on the Medicare website by sorting by zip code. There are assessments of healthcare inspections, quality, price, and overall rating. About 15 percent of all skilled nursing facilities are owned by local government which can be particularly helpful to those who may not have the funds to afford some privately-owned facilities. When making these determinations it is important to consult with a professional advisor who can help you navigate the costs, insurance options and Medicare benefits that can be used towards paying for some of your expenses.
Whether it is your plan to keep the home where you raised your family, move to a smaller home, take on a renter or roommate, join an assisted living community or move to a skilled nursing facility – it is important to make a “rightsizing” plan for your future. There are several factors to keep in mind and what works for one does not necessarily work for another. We help people make decisions that are the right fit for their personal and financial well-being. For more information on rightsizing your living arrangements contact us today.