Hearts and Wallets, a study group, interviewed 1,994 late career workers (aged 50-60 year olds) on what they expected to pay in retirement for housing and medical care. There were pretty striking differences between the predictions and the reality, suggesting that pre-retirees in their 50s and 60s get more serious projecting their expenses in retirement.
“We should be a little less worried about [what we’ll spend on health care] and focus a little more on housing,” said Hearts & Wallets founder and CEO Laura Varas. “The big misunderstanding was in housing.” Nearly half of the late career respondents (46%) said they anticipated spending less on housing in retirement. This is simply not true. (Click here for full article)
Why are the housing projections so off for retirees? The main reason is most retirees housing preferences have changed. Many move to a new area, one that costs as much or more than where they’re now living. This is what happened to my husband and myself when we moved to a condo in Sarasota, Florida (we paid $163,000 cash for the condo). What started off as $7,500 in housing costs (HOA fees, Security Fees, Mandatory Pool Membership fees, Taxes, Insurance and CDD Fees) got raised to $10,000 in only a year and a half. When you’re retired to a fixed income as DH and I were, I realized instantly that retiring to this condo was unsustainable (plus we had horrific neighbors!). Once we added in electricity, internet access and some other minor expenses, I realized our monthly costs were going to be sky high ($1,034). We immediately sold the condo (for a small profit) and thankfully we were able to come back to our marital abode, our current home in the New York Hudson Valley area.
Our housing costs, in our current paid-for home, only come to $809 a month, with mild annual increases projected. Our monthly housing costs to remain in place are: $420 taxes, $96 electricity, $50 home owner’s insurance, $155 propane, $28 for sanitation and $50 in repair and maintenance parts, as we provide all the labor. The total comes to only $809 a month. Where can we go for only $809 monthly living expenses? The cheapest rent for a one bedroom apartment in our area is $1,500 a month. That does not take in the monthly costs for water, sewer, sanitation, heat, electricity, insurance, internet etc.
Other factors that neither my husband nor myself were aware of when we contemplated re-locating to Florida was car insurance (super expensive), medical insurance (super, super expensive) and just for the daily, simple day-to-day living expenses: social expenses such as attending parties, concerts, lunch out with the ladies, book clubs came with sky-high price tags. You can’t help but socialize in Florida. It’s expected of you. I was appalled when fellow retirees would invite hubby and I over to a dinner party and expected us to pay $20 a person! Or bring enough flan to feed 20 people. Yes! These were actual requests! You can decline these invitations but you will quickly be labeled an outcast and be invited to NOTHING in the future. Who wants to retire alone and lonely?
Where we live here in upstate New York, it’s a very rural area. Most of our neighbors live on 10 to 20 acres. It’s OK to decline invitations and seek solace on your acreage. The town offers oodles of free events to keep you busy and engaged with as many neighbors as you like. No strings attached. Another great point to remain living in NY, for us, is the low cost health care hubby gets ($20 a month). We also just signed up for low-cost dental insurance ($22 a month). The Senior Citizen and low-income reductions available to us on our property taxes make living here affordable. That’s what the local government wants. They want people like us to remain living in New York and will bend over backwards to keep us here. No taxes are due on our social security. Other senior benefits are offered to us also, such as: free picnics, free social events as well as free daily meals if and when we so choose to accept these perks. There are NO Senior Discounts in Florida. Why? Because almost everyone in Florida is a senior. LOL! Tons of senior discounts readily available to us here in New York! Our summer pool membership is only $50 for the season!
Before you make a decision on whether or not to relocate in retirement, you have to run all of the numbers. Financial experts tell you to rent first before you buy. Wrong. We rented every winter in Sarasota for over 8 years before we bought. It wasn’t until we became actual homeowners did we truly understand what the heck was going on in this new location. Renters don’t know anything about property taxes, car insurance or the sales taxes due on most big ticket items. The super high prices for home repairs and upkeep. The greedy little HOA board members who somehow turn into monsters the day they are sworn into office.
Again, who knew?