Real-Estate Nightmare Looms for Retirees
This article has some very interesting points about the current state of the economy and how to age in place. We try to emphasis that technology is another option to allow folks to age in place for as long as possible. Please share your thoughts with us! by Robert Powell Thursday, May 12, 2011
Should you stay put, downsize or get out completely?
Five short years ago, many learned men and women warned Americans against thinking that rising home prices would eliminate or lessen the need for them to save for retirement. Institutions and advisers alike warned people against relying on the equity in their homes to finance part if not all of their consumption needs in retirement.
Today, that's no longer the case. In fact, today, we have almost the opposite situation. With home prices falling for nearly five years, many Americans now must consider what to do with their homes should prices continue to collapse and the equity in their homes -- if they are still lucky enough to have any equity -- disappears completely.
Aging in Place
In years past, Americans planned to age in place and viewed the equity in their home as the "break-in-case-of-emergency" asset, the one asset they would use to pay for long-term care or nursing homes. Today, however, aging in place isn't the option it once was, especially given the possibility that the equity in one's home might be falling in value, while the cost of keeping a home -- real estate taxes, property insurance premiums, and utilities -- is rising.
"The vast majority of people are looking to age in place," said Kenn Tacchino, a professor at Widener University, as well as the director The New York Life Center for Retirement Income at the American College. Unfortunately, keeping a home a person used to raise his or her family "may not be the most cost-effective or accommodating place for retirement living," he said.
One option to consider if you plan to age in place is something that was commonplace years ago: multigenerational living. AARP and Pew Research Center recently reported that growth of multigenerational households has accelerated during the economic downturn. In fact, the number of households comprising multiple generations jumped to 7.1 million such households or 6.1% of all U.S. households in 2010, from 6.2 million intergenerational household or 5.3% of households in 2008, according to AARP. By contrast, in 2000, there were 5 million households comprised of multiple generations or 4.8% of all households.
In essence, having a multigenerational household could be one way to age in place while reducing the cost of maintaining a home.