Renting in retirement

[Safire]

Hello,

Due to having a child with autism who may likely live with us for the rest of our lives, and due to us wanting to live close to our other child as we age (not an easy choice or decision), we may always have housing costs. Unfortunately, my preliminary research indicates that the best services for the disabled tends to be in areas which are also HCOL or VHCOL, where we may never be able to afford a decent home.

Do you have any advice for people with a modest nest egg, who may have housing costs in retirement as well? We expect health insurance and the state to pick up most of our son's medical and therapeutic needs & costs, and we are in the process of setting up a special needs trust for him, but the idea of having to pay rent in retirement really worries / concerns me, especially as that means leaving less money for our son after we're gone?

How can we minimize housing costs in our situation? Is that even possible?

 

[chassis]

Renting an apartment is the lowest cost living situation.

A modest single family dwelling with no mortgage still requires maintenance and property taxes paid. Home ownership is a far over promoted idea. There are too many people who benefit other than the homeowner, therefore the over-promotion.

Apples for apples comparing all alternatives in the same city/metro, renting an apartment is the lowest cost living situation.

 

[Surewhitey]

We currently own, but have rented in certain situations too. Renting is the simplest life in our experience, but can also be a limiting lifestyle too.

We were uncommitted to living in LA long-term and housing was stupid expensive in 07. Good decision in hindsight. We rented homes for a fraction of the cost of owning. Didn't have any maintenance too.

Now living in Dallas, living in a small ranch house in DD's neighborhood, we own with the maintenance of a 1952 home, but not bad.

More about lifestyle and time management for us. I'm w*rking half time and don't mind the w*rk of owning. When we think of retirement plans, probably will need to discuss how tied to a home vs a maintenance free plan if we take an extended stay somewhere for example.

 

[racy]

Maybe consider a roommate to share expenses.
(Don't mean to upset you, but) maybe all "the best care areas" are not exclusively in HCOL areas.

 

[bobandsherry]

Renting an apartment is the lowest cost living situation.

A modest single family dwelling with no mortgage still requires maintenance and property taxes paid. Home ownership is a far over promoted idea. There are too many people who benefit other than the homeowner, therefore the over-promotion.

Apples for apples comparing all alternatives in the same city/metro, renting an apartment is the lowest cost living situation.

Not sure how you came to this conclusion. A landlord experiences those same costs plus has an expected rate of return. In turn passes along to you in the form of rent. Perhaps more of a known or expected costs vs your own home. You also miss out on increase in the appreciation value of the home.

I'm sure cases to be made on why renting vs ownership but I don't see it from a overall lower cost perspective.

 

[Surewhitey]

Not sure how you came to this conclusion. A landlord experiences those same costs plus has an expected rate of return. In turn passes along to you in the form of rent. Perhaps more of a known or expected costs vs your own home. You also miss out on increase in the appreciation value of the home.

I'm sure cases to be made on why renting vs ownership but I don't see it from a overall lower cost perspective.

I'm also curious if we do get some inflation in the future how this will affect home values and how much rent increases.

 

[bobandsherry]

How can we minimize housing costs in our situation? Is that even possible?

Given a specific location, the only option to minimize is to minimize your housing wants (smaller place, slightly less desirable). But housing is typically a small part of ones overall cost of living. Bigger picture, what other expenses can you reduce to minimize your overall living costs? You may move closer to your child and then have access to public transportation so you can eliminate the costs/expense of owning vehicle(s). You'd have to look at your own expenses as to what you could eliminate or reduce.

 

[VanWinkle]

Given a specific location, the only option to minimize is to minimize your housing wants (smaller place, slightly less desirable). But housing is typically a small part of ones overall cost of living. Bigger picture, what other expenses can you reduce to minimize your overall living costs? You may move closer to your child and then have access to public transportation so you can eliminate the costs/expense of owning vehicle(s). You'd have to look at your own expenses as to what you could eliminate or reduce.

I'm not sure I agree with the housing being "typically a small part of ones overall living costs". I have been retired 5 years, own my own home in a
Avg cost of living area. Between property taxes, Insurance, and maintenance,
it is my largest expenditure. It is 9 years old 1750 square ft ranch, not extravagant in any way. Maybe this is not the case for you, but I would
guess it is the highest expense for many.

 

[Jerry1]

Maybe consider a roommate to share expenses.
(Don't mean to upset you, but) maybe all "the best care areas" are not exclusively in HCOL areas.

I was going to point this out, but the added issue is being near the other child. I totally get that. We feel it very important and rewarding to be near our adult kids and grandkids.

I think it’s generally true that the best healthcare is around large medical centers and those are generally in large urban areas that are higher cost. However, depending on the care that is needed, very good care can be found in many other areas of the US. Also, not all medical centers are in high cost areas. For example, I live near the University of Michigan. No slouch in terms of healthcare. Ann Arbor is a higher cost area of S.E. Michigan, but it’s nothing like an area like Boston. And, if you drive 30 minutes away from Ann Arbor, there’s very affordable options.

 

[bobandsherry]

I'm not sure I agree with the housing being "typically a small part of ones overall living costs". I have been retired 5 years, own my own home in a

Avg cost of living area. Between property taxes, Insurance, and maintenance,

it is my largest expenditure. It is 9 years old 1750 square ft ranch, not extravagant in any way. Maybe this is not the case for you, but I would

guess it is the highest expense for many.

Perhaps I wasn't clear with bad choice of words in a rapid response... my point, other expenses make up a large portion of cost of living. So look at options to reduce those costs. You disagree?

BTW, what % of your total expenses does your housing make up? 5 years retired myself. In my prep for FIRE I had already lowered my housing costs by moving to a more cost friendly area. New home, slightly larger (2,600 sq ft) than I had before, but lower cost of house and way lower taxes and less costly to maintain. New home also saves me $$$ on utility costs as it's very energy efficient. Also reduced number of cars lowering my depreciation and insurance costs. Now travel is my big nut and by choice.

 

[ivinsfan]

First of all you have some hard decisions to make,welcome and lets us know about any questions you have.


Do you mind my asking how far in the future this would be happening?


A modest nest egg is one thing, your annual income vs expenses would be the big number here.



You have several big issues to grapple with and give not very much info. Which is absolutely fine, but doesn't lead to people giving you informed answers

 

[Markola]

Maybe consider a roommate to share expenses.
(Don't mean to upset you, but) maybe all "the best care areas" are not exclusively in HCOL areas.

For example, the Mayo Clinic is in a small city in otherwise rural Minnesota, except with a long runway for all the private jets from around the world coming in and out.

 

[ivinsfan]

For example, the Mayo Clinic is in a small city in otherwise rural Minnesota, except with a long runway for all the private jets from around the world coming in and out.

Actually the state of MN is right up there for family assistance and care of disabled persons. This makes a difference too.

 

[jazz4cash]

Not sure how you came to this conclusion. A landlord experiences those same costs plus has an expected rate of return. In turn passes along to you in the form of rent. Perhaps more of a known or expected costs vs your own home. You also miss out on increase in the appreciation value of the home.

I'm sure cases to be made on why renting vs ownership but I don't see it from a overall lower cost perspective.

I agree and will add that renters generally experience ever increasing cost especially in HCOL areas. This favors ownership since it generally freezes a significant portion of the cost for housing. 30 yr fixed mortgages are a marvel, especially at current rates. The decision can vary greatly based on location.

 

[Safire]

Do you mind my asking how far in the future this would be happening?

We expect to be retired in 15 years.

A modest nest egg is one thing, your annual income vs expenses would be the big number here.

Right now, after taxes and funding his 401Ks (he contributes $10K and employer matches with another 3K) and fully funding our Roth IRAs, our income = our expense. We have 6 months worth of expenses in a savings account at a local bank

You have several big issues to grapple with and give not very much info. Which is absolutely fine, but doesn't lead to people giving you informed answers

It is absolutely critical for us to stay physically close (not with, but close) to our other child, for support with oversight, and decision making for our son, especially as we age. We had our children late in life, so have a young family, despite being older. Daughter has expressed interest in a career in teaching or information technology. If she decides to work in IT, then she may be stuck in a VHCOL area, and that might lead to expensive rental costs for us. Regardless of what she chooses to do with her life, we're hoping to be no more than an hour's drive away from her, eventually.

Neither of us will get an inheritance.

Aside from our nest egg (mid 6 figures), we will get SS. Our son's trust will be funded by whatever remains of our IRAs, 401Ks and husband's life insurance. I have never qualified for life insurance as I developed diabetes in my early 20s. Longevity also runs in his family but not in mine, so I will highly likely predecease him.

The fear of not leaving enough for our son is something that might haunt me from even beyond the grave. I wish there was a way to max out his inheritance by minimizing our expenses, the biggest of which is / will likely be housing.

 

[MarieIG]

Do you qualify for a rent controlled apartment? As far as buying a house, it appears that you don't know where you are going to end up living.

However, you do need to keep in mind the standard of living for your family (including your son) now.

You want a good, pleasant, atmosphere for the entire family. I suspect that you are under enough stress as it is.

Also, after you and your DH are gone, what will the special needs trust provide for your DS, that will not be provided by government agencies? (You might not need as much as you think if his housing, food, medical, etc. is all covered.)

From what I have seen, the most important "thing" for a special needs child is a loving, devoted, advocate (parents/ sibling) who makes sure the child/adult actually has good care and attention, and gets what he/she needs.

 

[Focus]

Renting an apartment is the lowest cost living situation.

A modest single family dwelling with no mortgage still requires maintenance and property taxes paid. Home ownership is a far over promoted idea. There are too many people who benefit other than the homeowner, therefore the over-promotion.

Apples for apples comparing all alternatives in the same city/metro, renting an apartment is the lowest cost living situation.

In the U.S. it's taken as a given that buying is better than renting, and like you, not sure I agree. I'm about to sell my house and rent a small apartment. I haven't rented in almost three decades. I'm relieved to not have to maintain a house. I've also lived in condos, and those have their own drawbacks (high HOAs, surprise assessments, free-spending and overly frugal neighbors, etc.).

 

[Safire]

Do you qualify for a rent controlled apartment? As far as buying a house, it appears that you don't know where you are going to end up living.

However, you do need to keep in mind the standard of living for your family (including your son) now.

You want a good, pleasant, atmosphere for the entire family. I suspect that you are under enough stress as it is.

Also, after you and your DH are gone, what will the special needs trust provide for your DS, that will not be provided by government agencies? (You might not need as much as you think if his housing, food, medical, etc. is all covered.)

From what I have seen, the most important "thing" for a special needs child is a loving, devoted, advocate (parents/ sibling) who makes sure the child/adult actually has good care and attention, and gets what he/she needs.

We don't qualify for a rent controlled apartment at this time. I think the govt will provide for his medical needs and care. I don't want him ending up in a group home as I have heard horror stories about them.

I'd like for him to live with family with paid in-home care / assistance, but that depends on whether my daughter or any of my nephews / neice will want that responsibility.

At the least, I hope his sister or cousins check in on him frequently if he does end up in a group home (which I pray does not happen).

I just want him to live a comfortable, happy life with a good quality of life, without him being dependent on govt provided home & care.

In the U.S. it's taken as a given that buying is better than renting, and like you, not sure I agree. I'm about to sell my house and rent a small apartment. I haven't rented in almost three decades. I'm relieved to not have to maintain a house. I've also lived in condos, and those have their own drawbacks (high HOAs, surprise assessments, free-spending and overly frugal neighbors, etc.).

Intent is that we all have a stable home to live in and as hedge against ever rising rents. Also any home we purchase will be sold at the demise of the surviving spouse (highly likely my husband) and proceeds deposited in a bank account held by his SNT.

Just additional monies for his care, keeping & comfort.

Or, alternatively, my daughter may choose to rent the home out on the trust's behalf and invest any income remaining after maintenance & taxes for his benefit.

We don't know yet. We'll see if we ever do cross that home purchase bridge.

 

[zinger1457]

Renting an apartment is the lowest cost living situation.

A modest single family dwelling with no mortgage still requires maintenance and property taxes paid. Home ownership is a far over promoted idea. There are too many people who benefit other than the homeowner, therefore the over-promotion.

Apples for apples comparing all alternatives in the same city/metro, renting an apartment is the lowest cost living situation.

My house has been paid off for 12 years, renting an equivalent place would cost me over 3X what I currently pay in property taxes, insurance and yearly maintenance.

 

[street]

I don't spend 1200 bucks a month to live in my paid for home. That is what it would cost to rent an apartment here plus renters insurance, utilities etc.

I don't have that much expense over the years in my home. My home has been paid off for 36 years now.

 

[chassis]

Not sure how you came to this conclusion. A landlord experiences those same costs plus has an expected rate of return. In turn passes along to you in the form of rent. Perhaps more of a known or expected costs vs your own home. You also miss out on increase in the appreciation value of the home.

I'm sure cases to be made on why renting vs ownership but I don't see it from a overall lower cost perspective.

@bobandsherry, did you read the word "apartment" in the post?

The OP is looking for a low cost living situation. Renting an apartment is the lowest cost living situation.

@street Respectfully, it doesn't matter what you pay for housing/living expenses. The OP is solving for his/her own situation, and very well may need to live in a HCOL area. Maybe not. You appear to live in western state, potentially in a rural area. Your house has been paid off for 36 years. You are in a different situation than the OP and your comment did not address the OP's post.

 

[pb4uski]

It's foolish to unequivocally state that renting is more affordable than buying. It varies a lot from city to city and is very situational. I like the NYT rent or own tool.. it is very comprehensive.

 

[Sunset]

We don't qualify for a rent controlled apartment at this time. I think the govt will provide for his medical needs and care. I don't want him ending up in a group home as I have heard horror stories about them.

I'd like for him to live with family with paid in-home care / assistance, but that depends on whether my daughter or any of my nephews / neice will want that responsibility.

At the least, I hope his sister or cousins check in on him frequently if he does end up in a group home (which I pray does not happen).

....

I'm sure if one looks hard enough or reads the internet enough, one can hear horror stories of everything. Renting/Cab/bus/biking/group homes.

I worked in group homes for years, and then an apartment program, where I set up small group homes/apts consisting of 2-4 people.

It's very common for parents to be wary, nervous of a group home. Many times they make the mistake of delaying moving the adult "child" into a group home until it's an emergency due to their own old age.
I used the term "child" earlier as for many parents, that is how they viewed their 22->44 yr old son/daughter.

The most successful clients were the ones that came to us in their early 20's as they had less years of bad habits learned from the parental home, or even worse a mass institution.

None of the dozens of parents I met over that time, ever pulled their relative out of the group home, and most were pretty impressed to find out their son/daughter could do their own laundry, tidy their room, and participate in cooking.

I suggest looking at, and visiting group homes to see what is offered, as it's quite possible the nephews / niece will not want that life long Obligation as they probably want to have a life themselves. You may be surprised to find some very nice group homes, and possibly find ones that have short-term stays of a couple of weeks. A good practice for the potential client, and a nice relief break for the rest of the family.

Understand that a good group home, won't accept just anybody, they should have a specialty and stick with it. This means our group home rejected potential clients, as we discovered the parents covered up serious secondary issues.

 

[beyou]

Not sure how you came to this conclusion. A landlord experiences those same costs plus has an expected rate of return. In turn passes along to you in the form of rent. Perhaps more of a known or expected costs vs your own home. You also miss out on increase in the appreciation value of the home.

I'm sure cases to be made on why renting vs ownership but I don't see it from a overall lower cost perspective.

Seems only cheaper if you live in a lesser size home.
If renting = small home or apartment complex
vs owning means larger house, then yes you can save renting.
But in my HCOL area, few housed are for rent and those that come up are expensive.

 

[Bamaman]

Having a special needs family member is difficult in every situation--especially on siblings that may end up responsible in the long run.

My cousin had Downs Syndrome, and he was institutionalized his entire life. Our state once had excellent care in group homes, but got out of the mental health field 30-40 years ago. Then Blake went to a nursing home for a few years.

The state ended up finally placing him with Volunteers of America where he and two other gentlemen lived in a rented triplex. He'd go to a day care center during the day and come home @ 4:00 p.m. where a gentleman took care of him until being relieved @ midnight. Another gentleman took care of the guys until they left the next a.m. I cannot tell you how wonderful Volunteers of America was until the end.

My cousin was very happy, and he received specialized care my elderly aunt (who died 3 mos. short of 100) couldn't provide. After all, Blake had his own life to live. He was happy to see his relatives, but 20 minutes later he was glad everyone left.

Too bad you're not mobile. I understand Atlanta has an incredible autism clinic and it's a very low cost of living city--for such a major city.