Exercising Your Options
Refuse the evil, and choose the good.
ISAIAH 7:15
You don't have to live in a senior citizen's resort to be supremely happy and well cared for in the years of your retirement. Many other options for housing, employment, and leisure are available. Study those options carefully and never move forward without careful planning and advice from many quarters.
The lifestyle we select reflects our needs and preferences and also how we view the needs of other people in our community. Lifestyle involves the use of all of our resources — time, space, and money. It develops over many years, although we seldom stand back and view it objectively.
TURTLES AND HARES
Two kinds of people prepare for retirement — turtles and hares. Turtles plan too hard, pinching and scraping for years
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while alienating children and living on the ragged edge just so they'll have something for retirement; hares live carelessly, spending with abandon and ending up with insufficient funds for the years when earning power is depleted.
Brad and Joanne were turtles. They had a problem with rigidity. Brad had grown up in a home with never enough money, even for basics. His dad died at age fifty, leaving his family virtually destitute. Brad began working at sixteen to support his mother and siblings. Eventually he became quite successful selling computers. For fear of being poor again, Brad forced his wife and children to live on a small fraction of his annual earnings while he invested the rest.
Brad's theme song was an adaptation of Will M. Carleton's long and mournful poem, Over the Hill to the Poor-House.
Over the hill to the poor-house
I'm trudgin' my weary way —
I, a man of sixty,
and only a trifle gray —
I, who am smart and chipper,
for all the years I've told,
As many another workman
that's only half as old.
Joanne was quite frustrated by Brad's austere lifestyle. Her clothing allowance was minimal; they took few vacations; they never attended sporting events even though, after thirty years of hard work, they had accumulated nearly a quarter of a million dollars. Brad had planned for the future out of fear, not faith. The lifestyle this couple developed in forty years of marriage will not likely be broken in the new schedule called retirement.
Harvey and Ann Marie, on the other hand, were hares. They seldom thought of retirement. They were generous toward their children, enjoyed lengthy vacations, followed sports with passion, but had no budget to monitor their
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expenditures. Their theme song was written by John Heywood in "Be Merry, Friends":
Let the world slide, let the world go;
A fig for care, and a fig for woe!
If I can't pay, why, I can owe,
And death makes equal the high and low.
Harvey and Ann Marie entered into their retirement quite differently from Brad and Joanne. Their income consisted only of their earnings from Social Security plus a small inheritance left by Ann Marie's parents. They had to adjust their lifestyle downward, causing tension in the home and not a few grumbles about how life had dealt them a poor hand. For want of planning, retirement was less than it might have been.
Solomon described Brad and Joanne in Ecclesiastes 5:13: "I have seen a grievous evil under the sun: wealth hoarded to the harm of its owner." But he also wrote about Harvey and Ann Marie: "Wealth and possessions and power to enjoy them — this is the gift of God" (v. 19). As in anything, a good thing can be carried to excess.
Many passages of Scripture commend the prudent person of industry. Proverbs 6:6-8 gives the example of the ant.
Go to the ant, you sluggard;
consider its ways and be wise!
It has no commander,
no overseer or ruler,
yet it stores its provisions in summer
and gathers its food at harvest.
The harvest years for most of us are between ages twenty-five and sixty. Therefore, it is wise to lay aside some of the surplus for the latter phase of our lives, when our earning abilities decline, so that we don't become a burden to our children. If you are not yet retired, take stock of your situation as follows:
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List your strengths and weaknesses honestly.
Write down what you expect of retirement.
Ask retired people what to expect.
Learn about educational, recreational, social, and volunteer opportunities for retired people in your area.
Develop support systems to replace those in your employment.
HOUSING OPTIONS
Where a retired person lives has an enormous impact both on the retirees and on their family members. Children, too, are affected by where grandpa and grandma live.
Sometimes a child's perception of those facilities is pretty amusing. I've heard many such stories about children from my friend Art Linkletter. The following school report by a child following a visit to his grandparents' mobile home park in Florida is one of my favorites.
We always spend Christmas with Grandpa and Grandma. They used to live up here in a big brick house, but Grandpa got retarded and they moved to Florida.They live in a place with a lot of retired people. They live in tin huts. They ride big three-wheel tricycles. They go to a big building they call the wrecked hall. But if it is a wrecked hall, it is fixed now. They play games there and do exercises, but they don't do them very good. There is a swimming pool and they go to it and just stand there in the water with their hats on. I guess they don't know how to swim. My Grandma used to bake cookies and stuff. But I guess she forgot how. Nobody cooks — they all go to fast food restaurants.
As you come into the park there is a doll house with a man sitting in it. He watches all day, so they can't get out
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without him seeing them. They wear badges with their names on them. I guess they don't know who they are.My Grandma says Grandpa worked hard all his life and earned his retirement. I wish they would move back home. But I guess the man in the doll house won't let them out.
You probably will never be locked in your house by a
"Where a retired person lives has an enormous impact both on the retirees and on their family members." |
guard in a doll house or live in a tin hut, but this is an opportunity to take another look at your living quarters. Do they suit your needs today? How will they suit you in the first years of retirement? Will you be able to handle the upkeep of the yard, pay the taxes and insurance, and negotiate its stairs and general layout?
What about your neighborhood and community? Can they accommodate your needs when you retire? Do most of your friends, family, children, grandchildren, and other relatives still live nearby? Are you satisfied with the cultural, worship, and recreational facilities nearby?
Here are some other considerations in planning your retirement housing.
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The thought of relocating adds intrigue to plans for retirement, but most people stay right where they've lived for most of their lives. The elderly are less likely to change residence than other age groups. In 1985, only 16 percent of persons sixty-five and older had moved since 1980 (compared with 45 percent of persons under sixty-five). The majority (80 percent) had moved to another home in the same state.
In 1985, about half (49 percent) of persons sixty-five and older lived in eight states. California, New York, and Florida had more than two million each; Illinois, Michigan, Ohio, Pennsylvania, and Texas each had more than one million.
If you follow the example of the preceding generation and choose not to relocate, your interest will focus on your current housing and nearby alternatives. You will want to know the financial and legal aspects of retirement housing, especially your present home and the money you have tied up in it if you are an owner. This section explores (a) what you know now about how you want to live and (b) how planning can make your desired lifestyle a reality.
If you decide to stay put, several steps can ease your financial concerns: Conserve heat and maintenance costs by shutting off rooms or even entire floors when they are not in use. If local statutes permit, rent out rooms for added income and perhaps companionship as well. Consider also the option of converting part of your home into an accessory apartment — an independent living unit added to, or carved out of, a single-family house. Zoning regulations in some single-family-home neighborhoods make accessory apartments illegal. But restrictions on this type of unit are being relaxed. Check with your zoning board on the legal status of accessory apartments in your community.
You can arrange for shared housing, a less structured concept than renting, in which you share your entire home with other unrelated persons, of your own age group or a mix of age groups. Check local zoning statutes first.
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Your housing choice says a lot about what you can afford, whether you want privacy or closeness to neighbors, indoor or outdoor living, complete independence or complete security, formal or informal entertaining, and whether you need space for house guests, pets, elaborate hobbies, an office or study in the home.
An important feature in selecting where you live is accessibility to various facilities and services. How important are educational, medical, social, cultural, recreational, and employment opportunities in your retirement lifestyle?
Three stages of living characterize most people who are facing retirement: the active stage (working and taking care of yourself and your home); the slowdown stage (no full time work, but you still take care of your own daily needs); and finally the dependent stage in which you need regular medical care. Think about these stages as you plan for retirement.
Property Tax Relief
All fifty states and the District of Columbia provide some form of property tax relief to older people. The programs fall into four categories:
Circuit-breaker. This program is designed to protect family income from property tax overload. Relief usually takes the form of a direct reduction in the property tax, a refundable credit against income tax, or a cash refund.
Homestead exemption. This opportunity usually offers a fixed percentage reduction in the assessed valuation of the home or a fixed reduction in the tax bill.
Tax freeze. This proviso holds constant the tax rate existing at the time the applicant reaches a legislated age — usually sixty-three or sixty-five.
Tax deferral. This fourth initiative offers a deferral of all or part of the tax bill until the house is sold or the owner dies. The deferral is secured by a lien.
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Find out what programs are available in your area. Get in touch with your state's office of taxation. In addition, the Department of Housing and Urban Development (HUD) provides some assistance to low-and moderate-income older persons who are renters. Write or phone your HUD regional or field office for current information on these federal government-assisted housing programs.
Cashing in Home Equity
Equity is the cash value of your property minus any claims against it. If your house is appraised at $120,000 and the balance due on your mortgage is $20,000, your equity is $100,000.
You can convert your equity to cash in several ways: (a) reverse mortgage, (b) sale/leaseback, or life tenancy, (c) deferred payment loan, and (d) a homeowner equity account.
Beware: Any of these financial arrangements can endanger your financial resources if not understood. Seek legal advice before signing any papers.
A reverse mortgage is the opposite of a conventional mortgage loan. The loan is paid to the homeowner in monthly payments, with the amount determined by the amount of home equity borrowed against, the interest rate, and the length of the loan. The loan is repaid at a scheduled time or, under certain arrangements, when the homeowner dies or sells the home. In some cases, the home must be sold to settle the obligation.
A sale/leaseback, or life tenancy, provision allows the owner to sell the property, often at below-market rate, to an investor. The owner retains the right to live in the house for life as a renter. The investor pays the owner in monthly installments over a period agreed upon and also covers the obligations of home ownership such as insurance, taxes, and repairs. Quite often a deferred-payment annuity is purchased at the outset to provide the owner with continued monthly income once the house has been paid off by the investor.
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A deferred-payment loan allows older homeowners to draw upon home equity to maintain and repair the property. This holds property value high. This kind of loan is often provided by a local government for low-income persons at a low interest rate. It allows homeowners to defer payment of all principal and interest until the homeowner dies or the house is sold.
Homeowner equity accounts are available from brokerage houses and banks nationwide. This option allows the homeowner to set up a line of credit secured by a lien against his or her house. The maximum amount would equal 70 percent of the equity accumulated in the house. The homeowner can draw on this line of credit by using a credit card or by writing a check to buy anything at all except stocks. However, loans must be repaid with interest over a specified time that begins when the loan is secured. Payments are not deferred.
Before making any move, obtain good legal counsel. Make certain that you understand all that is involved in each program and what the ramifications might be.
COOPERATIVE HOUSING
Condominium, cooperative, or life care residences are popular with senior citizens. Before making any purchases or signing any long-term contract for housing, of course, get legal advice.
Are costs subject to an increase? If a monthly fee is required for maintenance or services, find out if the fee is subject to an increase and how rates may be raised.
Who pays for recreation? The facility may offer a swimming pool, golf course, and game room and then after you move in, turn over the operating costs of these wonderful assets to the residents. If the contract so specifies, you might find yourself paying much more for their use than you
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thought. These amenities do improve the salability of the property, however.
What are your rights and restrictions? The fine print in your housing agreement may place restrictions on visitors, entertaining, or ownership of pets. You may also find that there are restrictions on how and to whom you can sell your property.
If you are a tenant in a building that may be converted into a condominium, you will need to know what your legal rights and obligations will be in such a conversion. State and local laws vary widely, but most give tenants the right of first refusal. And in some states older persons are given certain protections, such as being able to retain their unit on a rental basis if the building goes condo. Since conversion can be a complicated matter, tenants opposed to it should organize and should retain a lawyer or get other expert opinion.
Tenants should also be aware of any local rent-control ordinances that apply in their circumstances. If a landlord violates a rent-control ordinance, the tenant must take his or her own steps to rectify the matter. No one else will do it for the tenant.
Time-sharing arrangements for vacation or other part-time housing require careful investigation as well. The concept of time sharing is sound, but the industry is poorly regulated.
WORK OPTIONS
The American Association of Retired Persons (AARP) has found through surveys that many older people want to work, but not full time. Whatever you decide about work, ideally it should be your decision, not one that is forced upon you.
Study these alternatives now so that you will be ready when the time comes.
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Tapering-off Programs. Occasionally employers provide the alternative of phased retirement to their employees. By working progressively shorter hours and taking longer vacations, employees can adjust gradually to the increased amount of retirement leisure time.
Flextime. Variable work hours and employees on one job are popular. With flextime, companies find that workers' job satisfaction and performance improve.
Part-time work. In many parts of the country, older workers can find part-time employment after they retire from a regular job. Part-time work offers extra income and personal satisfaction. In some areas, placement agencies exist specifically to make job matches between older workers and local employers.
Retraining or Re-entry. Some companies have programs to retrain employees for less demanding jobs. Occasionally these companies rehire workers to serve in various capacities; for example, part time at their old job or temporarily in seasonal jobs.
A New Career. It can be refreshing to begin a totally new career in middle or later life. Some retirees start their own businesses centering around their hobbies or interests.
Voluntarism. I am devoting an entire chapter to this subject a bit later. Through volunteer work, the world is at your feet. Many agencies have work ready and waiting. Some pay expenses. Others work through churches and/or all sorts of group participation.
CASE STUDIES
Let me share examples of some actual cases. How would you solve the problems these people face?
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Pre-Retirement Blues
Mark Fisher is employed as a salesman for a large title company. He fears retirement, which is just three years away. He feels depressed and dragged out at the end of the day. Which of the following suggestions do you think would work the best?
1. Mark can get a physical examination.
(How can illness affect mental attitudes and vice versa?)
2. He can ask the company's personnel department for help.
(In what ways could the personnel department help?)
3. He can ignore retirement and try not to think about it.
(What could happen if he attempts to forget the future?)
4. He can start making positive plans for retirement.
(What will this shift do for Mark?)
5. Other options:
For Better or for Worse, but for Lunch, Too?
Susan McIntire dreads the day her husband retires and stays home all day long. She pictures her husband underfoot, interfering with her tight schedule of activities in her home, church, and community. What should she do?
1. Susan can plan individual and shared activities with her husband, starting now. (How would this help? What activities would you suggest?)2. She can suggest that her husband find part-time work. (How might her husband respond to this suggestion?)
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3. She can plan ways to guarantee privacy in the home for each family member. (But if the quarters are small, how would this be arranged?)4. She can suggest swapping chores for added interest. (What are some of the chores that could be exchanged?)
5. Other options:
Mike's Bike Shop
Michael Purvis can fix anything. Neighbors bring him their clocks, cars, flat tires, and toys; and somehow he manages to patch them all up. He has been doing this work in his basement and wants to branch out into a small bike shop when he retires in three years. What should Mike do now?
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Preparing for the Big Day
In four years, Randall Jones will retire; but he doesn't see how he and his wife can live on their retirement income. What can he do now to test his retirement resources?
A Missionary Comes Home
Eleanore Price spent most of her life overseas in missionary work caring for others. Now she plans to retire, but she discovers that she hardly knows herself. What steps can Eleanore take to build up her self-esteem and prepare for living alone?
1. Ask her family members, because they know her best. (Are they in a position to advise? Would they put her needs first?)2. Meditate, attend church, see her pastor. (What other agencies, people, and organizations are available? What should she do if these are of no help?)
3. Learn to enjoy solitude and to relax — physically, mentally, and spiritually — and enjoy her individuality
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(How could Eleanore take steps to reach this situation?)4. Join a prayer group, singing ensemble, and craft workshop for fellowship and nurturing. (How could these groups help Eleanore? What good things could come of these associations?)
5. Other options:
"To retire earlier than age sixty-five, Harvard found, significantly lowered one's longevity."
DEMOGRAPHICS
Increased life expectancy has caused the population of America to grow rapidly. In 1982, approximately two out of every ten United States citizens were fifty-five or older; by the year 2030, the United States Census Bureau predicts that this figure will be slightly more than three in ten. By 2050 more than 5 percent of the population will be eighty-five or older.
Retirement doesn't automatically provide better health, a stronger marriage, and freedom from worry. A study sponsored by Harvard University involving graduates who had reached the age of seventy-five surprised the pollsters. Among one hundred men who had retired at age sixty-five, seven of eight were dead by the age of seventy-five. And to retire earlier, Harvard found, significantly lowered one's longevity.
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Gerontologists see ahead a growing number of vital, well-educated, financially secure retirees who will demand a greater voice in national policy making decisions. What an enormous resource this group will provide to the country!
