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Retirement Investing - Test Drive Your New Retirement Community - Part 3

October 27th, 2006 by Papabear

It is admittedly extra trouble to test drive a new area by renting there first. Maybe you’re sure you know you’ll like the area because you’ve been there on vacation several times or on business trips. But there’s nothing like investing 12 months in finding out what an area is like to live in year-round to help you avoid surprises.

It can be one of the best retirement investing strategies you can have, because it can pay huge dividends. It can open our eyes to the reality of living in a new place full-time. This is the kind of information you need to know before you spend serious money to ship your furniture cross-country to a new area.

Let’s say you visited Phoenix in the winter and dreamed of not having to shovel snow for days on end. I lived in Arizona for 5 years, and there is a lot to like about Arizona. My mother-in-law still lives there.

Winter is very pleasant in Phoenix. But are you ready for 120 degree days in the summer, when your feet stick to the pavement of asphalt parking lots, and the steering wheel in your car gets so hot from being parked in the sun, that you can get blisters on your hands from touching it?

Yes, I know you can buy a cover to keep your steering wheel cooler. But the point is, to fully experience an area you might be considering making a permanent move to, you need to test it out for at least 12 months first. Experience all the seasons, so you can see the good and the bad.

Some people love the heat in Phoenix. Some people spend the entire summer under an air conditioner and never go outside, at least in the daytime. If you like to walk for exercise, you’ll have to do it at 5am, like my mother-in-law, before it gets unbearably hot. Only you know what you like and what you can’t put up with.

So…before you make a permanent move, check out your new area by renting there for a year. Granted - it is extra trouble and maybe a little extra expense, but it can save you from making a very costly mistake. Get to know the neighborhoods and the city. Find out about development plans. You will be able to gather the kind of information you need to make an informed decision. If you rent first and then you decide not to move, you’ll still have your house back where you came from to go back to.

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    Retirement Investing - Test Drive Your New Retirement Community - Part 2

    October 26th, 2006 by Papabear

    Yesterday we talked about renting out your house, storing your furniture and getting set up to test drive an area you’re thinking about moving to before you actually buy there. This can be one of the best retirement investments you can make. When it comes to retirement investing, it can pay you huge dividends on the money you will spend. Today we’ll talk about why you need to get to know the area better before you put spend money on a home in a new area.

    One of the big benefits you get by renting in an area before you buy is you’ll get to know the various neighborhoods. This is especially important if you’re not buying in an age restricted retirement community. In a retirement community, at least you know what kind of development will be going on around you.

    If you buy in a regular neighborhood in a town in, say, the Sun Belt, you could be in for a rude surprise. If you rent first in your new area, it will give you time to find out what the future development plans are for the area you’re considering. If you’ll start reading the newspaper and watching the local TV news, you can learn some very valuable information.

    For example, when we moved to the town where we live now, we almost bought a particular house because it was close to the local high school and had beautiful open fields behind the house. It was only by a little research and a lot of luck that we found out that the city was about to build a huge community recreational park on that field.

    Now behind the house we almost bought are youth baseball fields with stands full of screaming parents and tennis courts lighted to at least 10 o’clock every night with huge floodlights. And right next to that, they built a new football stadium for the high school last year.

    The beautiful back yard of that house is now as bright as daylight at 10 pm, and the floodlights shine right into the back windows of the house. And of course, if we had bought that house and decided we wanted to sell it later because of these distractions, it would be worth a lot less than we would have paid for it.

    Tomorrow we’ll talk about getting to know the realities of living in a new area.

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    Retirement Investing - Test Drive Your New Retirement Community - Part 1

    October 25th, 2006 by Papabear

    Retirement investing includes more that just your retirement savings account. It also includes makes choices about where you will live. Over the next 3 days, we’re going to look at a strategy that could save you a considerable amount of money and possibly a really big mistake if you’re thinking about moving to a retirement community in another part of the country.

    Many folks relocate when they retire. Many more folks think about it but don’t do it. According to the Del Webb Company, the folks who built Sun City in Arizona, the first master-planned retirement community, 47% of those 51 to 60 years old would seriously consider moving after they retire.

    Here’s a modest proposal to think about before you make that move. Take the area you’re considering for a test drive.

    You wouldn’t think of spending $30,000 for a new car without test-driving it. You would not buy a car based on just reading the brochures and giving the car a quick walk-around. Yet every day people spend $150,000 for a small house in a retirement community of modest houses to $1,000,000 or more for a Miami condo based only on fancy brochures and a brief walk-through.

    Instead, consider test-driving your new location for a year. If you’re thinking about a particular retirement community that’s limited to seniors, you also need to check out the surrounding local area. If you’re planning to buy in a mixed residential area instead of a planned retirement community, it’s even more critical.

    In most parts of the country, it’s easy to find a real estate agent who can rent out your current home for a commission of 10% of the monthly rent. You can put your furniture in storage for about $200 a month or less, pay a small increase in your home-owners insurance and then use the rest to pay your rent in the area you’re considering moving to.

    Since you’re probably planning to downsize your house if you move after retirement, the net amount you will have from your rental income after paying the real estate agency and paying for furniture storage should cover the rent on a smaller house in the area you are thinking about moving to. Also, since it’s only for a year, a small apartment may be fine.

    You may want to take a small amount of your furniture with you in a Uhaul truck, or you can rent some furniture from one of those rent to own places. Maybe you can even find a furnished apartment.

    Today we’ve talked about setting up a test drive of your new area. Tomorrow we’ll go into a couple of real world examples of why checking out your new area could save you a great deal of money and a lot of frustration later on.

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    Retirement Investing - Just What Is Retirement?

    October 24th, 2006 by Papabear

    We’ve spent some time on this blog talking about retirement investing, but have you every stopped to think about just what is retirement? Where did this idea come from that we should stop working while we’re still able to work?

    Back in 1850, when the average life expectancy was just 38 years, there really was no such thing as retirement as we know it now. The rich could continue to get an income from their investments as long as they lived. Everyone else, mostly still living on farms, worked as long as they were physically able. Quite often the illness that stopped a person from being able to work was the illness that would also kill them.

    Even by 1900, when many people had moved into town and had gotten factory or service jobs, most folks still worked as long as they were physically able. If what stopped you from working did not kill you, you moved in with you children, if you weren’t living in a multi-generation household already. The retirement program then for almost everyone was for your children to take care of you in your old age. This usually was the only arrangement needed since life expectancy was still only about Age 50.

    The idea of retirement as a lifestyle after working evolved along with Social Security. But even when Social Security began in 1935, average life expectancy was still just Age 63. Since most folks did not live past Age 65, it didn’t take too much money to fund Social Security payments to those who lived to Age 65 to begin collecting benefits. There weren’t that many of them for those who were still paying into the fund.

    Now people are living longer, and politicians and pundits talk about the Social Security funding gap. Maybe, just for a moment, we can see the bright side of this. If most of us were still only going to live to Age 63 to 65, there wouldn’t be much of a Social Security “crisis” because there wouldn’t be that many folks living longer to collect money past Age 65.

    So…let’s resolve to be happy, just for today at least, that we have the luxury to need to think about retirement investing. If we were just going to work on and on until we suffered some fatal illness, we wouldn’t need a retirement plan. But we are living longer and healthier lives, and that’s a good thing.

    Here’s a thought on retirement investing and retirement planning that has stood the test of time, written by the wisest man who ever lived:

    “Go to the ant, O sluggard, observe her ways and be wise, which, having no chief, officer, or ruler, prepares her food in the summer and gathers her provisions in the harvest season.”

    Prov 6:6

    Let’s resolve to be diligent and consistent with our retirement investing so we will have our provisions stashed away when the Fall and Winter come.

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