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Retirement Living News

August 2014

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New Book Looks At Age Friendly Housing Options

For several generations the housing choices available to older and elderly adults essentially boiled down to four options:

  • Stay put (either alone or with a similarly aging or infirm spouse) in a house or apartment that may no longer be the right fit
  • Move in with an adult child or other family
  • Relocate to an age-restricted retirement community
  • Or, if regular assistance is required, uproot to a long-term care facility or nursing home

In her book, With a Little Help From Our Friends: Creating Community As We Grower Older, author and journalist Beth Baker observes that, as roughly 10,000 baby boomers a day are turning 65, “a significant cultural shift is underway.”

The current and coming generation of older adults is realizing, says Baker, “that they can make other choices about where and how to live. With intention and planning, people around the nation are creating ways to live in community, alternatives that give them more control, more companionship, more dignity and choice than generations past.”

Here, adapted from Baker’s book is a brief guide to what some of these creative options are called and how they work.

1. Cohousing

Unlike a commune (famously personified by 1960s-70s era hippies and flower children), cohousing arrangements rarely come with a political or cause-directed agenda and they do not involve a shared ownership of property.

In a cohousing situation each person or family purchases a residence — be it an apartment, townhouse or even a single-family house — which contains everything a typical home would have (i.e., a kitchen, bathroom, bedroom and living room). However, the residences are linked to a shared space, such as a yard and gardens, and a large common room, dining area and kitchen that can accommodate group meals or gatherings.

The point of cohousing is community and being able to live independently without living entirely alone. Cohousing setups are typically intergenerational and don’t involve staff-provided services, but they can be age-specific. A few “senior cohousing communities” have been built, and some allow residents to hire household and care services as needed.

2. House Sharing

In these arrangements a person who has a home may invite a friend or family member, or even a tenant, to move in and help with expenses and chores. The setup might involve people of the same age or generation and the arrangement is one of peers residing together for companionship and cost efficiency. Sometimes two or more friends actually purchase or rent a residence together and become housemates. (For an example, see the sidebar above and the video below.)

Another house sharing scenario can revolve around the needs of an elderly property owner who doesn’t want to relocate but can no longer care for herself or a large home entirely on her own. A younger person (and younger can even mean someone who’s 60 or older) may be willing to provide some caregiving and transportation assistance in exchange for affordable or flexible housing. If so, the two can make for well-matched housemates.

3. Housing Cooperatives 

These types of member-owned, resident-governed nonprofit communities are common in certain cities (New York for one) and are generally not age-specific.

A co-op can be made up of housing that ranges from apartments to single-family houses to mobile homes. The co-op board, typically consisting of elected residents, decides what shared services the co-op will provide (such as social activities and maintaining the grounds) and often has approval rights over potential home buyers. Mobile home cooperatives are spreading in rural areas, and senior housing cooperatives have taken root, particularly in the Midwest.

4. Naturally Occurring Retirement Community
(also referred to by the acronym NORC)   

Neighborhoods or locations that just happen to have a significant number of older people (hence, the community’s commonality is naturally occurring or organic) create a network of shared support services. By working together each person is enabled to safely and comfortably “age in place.”

5. Niche Retirement Communities
(also called Affinity Retirement Communities)  

A traditional retirement community is an age-restricted, usually 55-plus community that enables older adults to live independently but with access to social activities and community amenities, such as yard maintenance services or fitness and recreation facilities. (Retirement destinations such as Florida and Arizona have many such places.)

A “niche” or “affinity” retirement community is one where residents share a common interest, religion or identity. The link may revolve around, for example, shared ethnicity, sexual orientation, occupation, hobby.

6. Villages

Founded in the Beacon Hill neighborhood of Boston in 2002, the Village model of “neighbors-helping-neighbors” provides a way for older adults to stay in their homes and community.

There are upwards of 125 Village communities throughout the nation today, with 100 more getting started, most operating via a mix of paid staff and volunteers who assist older residents with everything from transportation and technology training to home repairs and grocery shopping. Villages frequently provide social activities and classes as well. Members pay annual dues and are encouraged to volunteer themselves.

For information about ordering Beth Baker’s book, click here.

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Longevity Insurance Becomes a Retirement Plan Option

New tax rules will make it possible for workers to buy a type of annuity often called longevity insurance inside their retirement plans. The annuity aims to protect people from exhausting their savings in their later years.

Longevity insurance is actually a deferred-income annuity, in which a person pays a lump sum premium to an insurer in exchange for a guaranteed lifetime income stream that begins several years later — perhaps well into the person’s 70s or 80s. Until now, these annuities could not be widely used in 401(k) retirement plans and individual retirement accounts because those plans require account holders to begin withdrawals — known as required minimum distributions — at age 70 ½.

Last month the Treasury Department announced that workers can now satisfy those rules if they use a portion of their retirement money to buy the annuities and begin collecting the income by age 85. The move is part of the Obama administration’s broader effort to develop ways to provide Americans with more security in retirement.

“As boomers approach retirement and life expectancies increase, longevity income annuities can be an important option to help Americans plan for retirement and ensure they have a regular stream of income for as long as they can live,” said J. Mark Iwry, the Treasury’s deputy assistant secretary for retirement and health policy. The new rules take effect immediately.

To avoid the distribution rules, however, retirement plan participants can use no more than 25 percent of their total account balances, or $125,000, to buy the annuity, whichever is less. (The maximum dollar amount will be adjusted for cost-of-living increases over time.) So someone with a $500,000 account balance, for instance, can buy the maximum amount. And anyone who inadvertently exceeds the limits will have the opportunity to correct the error without penalty.

The annuities must also be relatively basic and cannot be larded with many of the special features — like cash-surrender options — that insurers sell in the commercial market. But annuity providers will be permitted to sell a feature that guarantees that the annuity owner’s beneficiaries will receive the premium amount originally paid, minus any payments already made. They can also provide an option that would continue paying the income to a beneficiary after the annuity owner’s death.

Though these options either cost more upfront or will ultimately reduce the income stream, insurance providers say many people buy them anyway because they are reluctant to part with such large sums with no guarantees. Treasury officials said that they wanted people to feel comfortable buying the annuities but that they also did not want to permit insurers to sell too many features that would reduce the income stream. Having more special options would also make it more difficult for workers to compare prices across providers.

It remains to be seen if the new rules prompt more 401(k) providers to offer annuities. According to the Treasury Department, only about one in five 401(k) plans offers annuities, and few people elect to buy them when they have the option.

Buying an annuity that doesn’t begin making payments until much later — perhaps more than a decade — is more cost-effective than buying an annuity at retirement and collecting the income immediately. The reason is straightforward: There is a higher chance the individual will not live long enough to begin collecting payments, and the money from people who die earlier benefits those who live longer.

But as with homeowner’s policies and other types of insurance, the idea is to pay a smaller amount of money now for more protection later. “You’re buying protection against risk — in this case, the risk of outliving your savings,” Mr. Iwry said.

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Alzheimer’s Research Focuses On Preventive Treatments

At the July Alzheimer’s Association International conference in Copenhagen “Earlier is better” became the mantra“ for those attending the meeting.  Experts are targeting the prevention or delay of memory decline more, instead of just focusing on treating patients who have the disease.

Results from one of the largest randomized prevention trials to date suggest why scientists are thinking this way. The trial found that intervention involving exercise, diet and other behavioral changes significantly improved overall cognitive functioning in patients after two years, compared with patients in a control group.

The trial, conducted in Finland and known as Finger, is only one of roughly 25 such studies under way, experts say. More are set to begin, examining different preventive strategies in cognitively normal people or those exhibiting mild memory problems who are at high risk for developing dementia.

Some focus on lifestyle activities and others on medications to slow or stop the ravages of the disease on brain tissue and neurons.

The number of Alzheimer’s sufferers in the U.S. is expected to roughly triple between 2010 and 2050, growing to 13.5 million in 2050 from 5.1 million in 2010. If the disease could be delayed by just five years, the number of people with Alzheimer’s at age 65 in 2050 could be reduced by nearly six million people, according to a report published by the Alzheimer’s Association in 2010.

Globally, one-third of Alzheimer’s disease is related to risk factors that can be potentially changed, such as lack of education and exercise, according to a study published  in the journal Lancet Neurology.

“Forestalling the appearance of symptoms by five to 10 years would have a tremendous public health impact and essentially would allow people to live the rest of their lives without real symptoms,” says Laurie Ryan, chief of the Dementias of Aging branch at the National Institute on Aging.

Prevention efforts are receiving more attention and financial backing in the field because of growing recognition in recent years that disease-related changes in the brain begin decades before memory problems become obvious. Treating patients once the symptoms begin may be too late to make a major impact on the disease, as demonstrated by the failure of several highly anticipated experimental treatments in recent years.

Also, a greater ability to measure the progression of the disease in the brain through the use of biological markers, such as the imaging of disease-related proteins, has made it easier to detect the subtle and slow progression of the disease in live humans. Before these biomarker tests, Alzheimer’s was diagnosed solely based on clinical symptoms. (It often still is.) Its pathology in the brain could only be examined with autopsy.

However, the studies are challenging because they require following a large number of people for years.

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New Book: Investing for a Lifetime: Managing Wealth for the New Normal

Investing for a Lifetime is designed to make saving and investing understandable to the investor. Wharton Professor Richard C. Marston, 2014 recipient of the Investment Management Consultants Association’s  prestigious Matthew R. McArthur Award,  guides an investor through the main investment decisions throughout a lifetime.

Investing for a Lifetime shows:

  • how younger investors can set savings goals
  • how both younger and older investors can choose investment portfolios to achieve these goals
  • how investors can sustain spending once reaching retirement.

Younger and older investors alike should understand savings goals that will provide enough income to sustain spending in retirement.   They should devise rates of saving that allow them to reach their goals by the time of retirement.  Though retirement is often the main goal of investing, it’s not the only one.  Marston discusses how funding a child’s education or saving for a down payment for a home affects overall saving.

Sensible investing is also necessary for savings goals to be realized.  Investing need not be complicated, but Marston explains that a diversified portfolio should include a mix of different types of U.S. stocks, foreign stocks, real estate as well as bonds. He describes each of these asset classes and shows how they fit in an investor’s portfolio.  He shows how investors can monitor the performance of their portfolios by establishing benchmarks for each asset class to judge how well their investments are doing.

The 272-page book, published in June, costs about $37.00 (hard cover) and is available at most booksellers.

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Few Boomers Plan to Incorporate Technology to Remain Independent

While a majority of boomers hope to stay in their homes and remain independent as they age, only 21% of them are planning to incorporate technology solutions or remodel and retrofit their homes to make doing so possible.

This technology innovation gap is widening for a population that will nearly double to 83.7 million by 2050, according to a study released by Philips and the Global Social Enterprise Initiative (GSEI) at Georgetown University’s McDonough School of Business.

Nearly 80% of 60- to 80-year-olds are not thinking about or are not sure whether they will upgrade or update their homes with new technologies, which they perceive as being costly and not important.

Three in five respondents say they’re not interested in upgrading their home; 33% say upgrades are too costly; 42% say upgrading in-home technology is too expensive; and 25% say they’re not interested in upgrades at all. But some show a willingness to invest in types of technology for things they use regularly, such as stove tops or ovens that automatically shut off, a remote control to manage everything in the home and driverless cars.

“Now is the time that we need to urgently and collectively shift focus to reduce the barriers and increase education on new innovations in technology that bring peace of mind, safety and convenience to aging seniors,” Brent Shafer, CEO of Philips North America, stated in the report.

To read the full report, click here. 

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