Where to Live in Retirement

What happens when the home you love no longer supports the life or community you want? In this thoughtful conversation, COO & CMO Stacey McKinnon interviews newly retired advisor Jason Naiman about how he and his wife, Sandy, have been weighing the decision between staying in their longtime home or moving into a retirement community. They explore the emotional and financial trade-offs: social connection, skill-building opportunities, maintenance-free living, built-in long-term care, rising monthly costs, and the impact on heirs. 

Tune in if you’re interested in…

* The pros and cons of staying at home vs. moving into a retirement community
* Why socialization and community can be critical for wellness in retirement
* How long-term care and memory care factor into retirement housing decisions
* The real financial costs, including entry fees, monthly increases, and estate impact
* How to navigate these choices with both practicality and compassion

Transcript

SPEAKER_00 0:09

Well, I am thrilled to be here today because we have taken Jason Naaman out of retirement to put him back on stage to present.

SPEAKER_01 0:21

They keep pulling me back in.

SPEAKER_00 0:24

In all seriousness, Jason retired at the end of last year with over three decades of experience as a financial advisor. And as he and I were talking about his retirement plans and what he wanted to do, we realized it's actually a very complicated discussion. It used to be maybe a decade or two ago that the retirement plan was to live in your home or to live with your kids and they take care of you. That was the right response. That is no longer the case for most people. That's not their retirement plan. And when we look at the data and statistics, 60% of people are considering living in a retirement community now, in terms of where to live in retirement. And that is a conversation that Jason and Sandy have been having and the pros and cons of being in their home versus a retirement community. So I thought it would be really nice for him to share with all of you today the research he's done, how he's navigated through this decision, and uh some of the like both financial and emotional aspects of that. Sound good?

SPEAKER_01 1:29

Let's do it.

SPEAKER_00 1:30

All right. Jason, would you start just like share a little bit of your story so everybody gets to know you and then we can get into you and Sandy's decision?

SPEAKER_01 1:36

I was born and raised in Brooklyn uh during the 50s and the 60s. Uh I finished college um at 20 years of age and moved out to California in 1966. So I've been out in the San Fernando Valley for the last 60 plus years. Um my first uh financial um career was in the life insurance business for 15 years with a company called Manufacturer's Life, uh, had a detour or two after that 15-year career, joined Morton Wealth, at that time Morton Capital, that had under a billion dollars in assets under management back in 1991, and uh 33 years later decided to retire at age 79.

SPEAKER_00 2:23

So now in deciding to retire, you you waited a while to retire, right? You kept working partially.

SPEAKER_01 2:29

Well, I was very fortunate. I had a uh four-year semi-retirement relationship with Morton, um, where I was able to work at a very um low level of intensity, transferred the bulk of my clients to other advisors, but still was involved. So I had a three to four year uh practice run at this.

SPEAKER_00 2:49

So so like when you finally didn't come to work on January 1st, anything surprise you?

SPEAKER_01 2:55

Um the most difficult thing for me is learning to do nothing without feeling guilty about it. I worked for 60, almost 60 years. I was never unemployed, and um being productive was a very important part of who I am. Um so doing nothing is not as easy as it sounds.

SPEAKER_00 3:17

I think it's called the art of doing nothing for a reason. All right, well, let's get into the topic a little bit more. Why don't you just start by sharing the decision that you and Sandy are navigating through, and then we can talk about the pros and cons.

SPEAKER_01 3:30

Um just to give you the bottom line before we get to the bottom line, we haven't made the decision yet. We're still analyzing it, we're still contemplating the pros and the cons. Um the decision that we're looking at is an adult community that is currently being built in Warner Center called Weisteria. I looked at a we we looked at an adult community in Calabasas, uh, Warner Center. Uh there's an adult community called the Variel in the valley, looked at Northridge, so I've looked at four different adult communities, and the Weisteria option for us seems to be the most attractive if we make that decision ultimately. Uh occupancy isn't until about a year from now, so we still have a year to make that decision. And and that's similar to University Village, if anybody knows of the It's the same operator as University Village is uh part of our due diligence. I went out and had lunch with the two clients at University Village, one of whom is in the second row, sitting right here. Um, and I asked those clients two questions. I said, What commitments have been made to you that have not been fulfilled? And they struggled to answer that. So that was impressive. And then the second question I asked was, if you could make one change about what's going on here or your living arrangement, what would that be? And Neil Small said the food could be spicier. So we're gonna take salt and pepper with us if we go, and I I think we can adjust to that. So uh the feedback we've gotten from people that have lived at University Village has been very, very positive.

SPEAKER_00 5:16

And it's something that I've been heavily involved with. A few clients who are considering considering University Village, uh the financial aspects, the pros and cons, what it actually feels like to live there. And it it's a one-mile walk from my house, actually. So I go visit University Village often, which is very nice, and uh a few of our clients are there. Well, why don't you actually walk us through the pros and cons of Weisteria versus being in your home?

SPEAKER_01 5:39

Okay, do you want to put that slide up? All right. Um let's start with the pros. The most important aspect of this decision in terms of moving to Weisteria for me is socialization. Uh I I'm kind of a stay-at-home kind of guy, and I'm an avid reader. I do logic puzzles. Um I have one really very, very close friend I see once a week. But uh left to my own accord, I probably wouldn't do much. And I know that for my emotional health, mental health, I would be better served by being in a community of other uh adults where the activities are uh innumerable, starting at 10 in the morning till six in the evening. Uh bridge, mahjong, pinochle, lectures, um they have their own movie theater. Uh so the socialization is probably the most important piece.

SPEAKER_00 6:34

Yeah, I put a little map up on the screen. That's from University Village's September activities. So truly unlimited number of activities.

SPEAKER_01 6:42

Yeah. Let's go back to the prose list. Um Maintenance-free lifestyle. Yeah, that's attractive. Uh I don't I don't need to elaborate on that. I think you all understand why that's attractive. Um, convenience, uh, the Weisteria community is gonna be uh, I think a two-block or two and a half block complex, 350 units. They're gonna have um retail stores in addition to the complex. Uh, one of the reasons I like it, uh it's it's more like a village. Um again, one other option I looked at was a location called the Variel, which was a large apartment complex. And it just it wasn't a village. And somebody a long time ago said, you know, we need a village. So um I like that aspect of it. Also, that everybody there would be coming in basically at the same time. So you're you're not like the new kid on the block moving into an existing community. Everybody else knows everybody, and now you have to make new friends. So that aspect of it is a positive. Um and the big feature of it in terms of its adult community is that um you need to be able to be uh to qualify for independent living initially. Uh my wife and I had to pass a cognitive test, and we both passed the cognitive test. If if I didn't, I wouldn't be on the stage. So you move in, uh the 350 units are independent living, but if at some point in time you need memory care or assisted living, they have apartments and uh part of the structure for that purpose, and you do not pay extra for that. As part of your monthly fee, you are prepaying, in essence, for long-term care, assisted living, andor memory care. So it's you know, it's like insurance. You may not need it, you may have paid for that service and never required it, but if you do, uh Stacy will probably talk more about this, it can be very, very expensive. So knowing that we're not gonna have to rely on our kids to take care of us, or what do we do if and when, that it's all right there, very positive. Uh the negatives. Um we live in a 350-3,600 square foot home. We've lived there for 30 years. Uh, when we bought the home, we made sure that the master suite was on the ground floor, so we don't have the problem of uh climbing stairs. Uh so we'd be moving from a 3,500 square foot home to a 1,350 unit, a 1,350 square foot unit apartment. Um my wife looked at me about two, three weeks ago and she said, I'm not sure I can live with you in such an enclosed environment. So uh that became another another issue. The unit that we wanted was 1,600 square feet, but it was booked. So we're on a waiting list, see if we can get a little larger unit. But uh we haven't seen the space. Uh Sandy wants to be able to walk in that space, walk around and see, okay, can I do this? Um obviously we've chosen floor plan, but we haven't seen the physical unit yet. Um moving. Uh according to a study of behavioral finance, the third biggest stress item in your life is moving. After the death of a loved one and divorce, moving. And I just the after 30 plus years in our home, and almost all of our walls are covered with stuff, relocating, and what do we keep? What do we give up? Um it's emotionally very, very challenging to make those decisions and deal with it. Um increasing monthly fee. Let me give you an idea of the structure of Wisteria. And this is fairly common. There's an entry fee ranges from three-quarters of a million dollars to three million dollars, depending on the size of the unit that you choose. 75% of that entry fee is refundable if after five years you choose to move out or after your after you pass to your heirs. Uh the monthly fee covers your occupancy, uh, meals, utilities, um, pretty much everything that you would expect to be covered by the monthly fee. But they project, and I've checked it out, uh, that the monthly fee will increase by about 4% per year. So in 10 years, your monthly fee is gonna be about 50% more than you started with. So you need to look at your portfolio and understand your financial situation, factor the fact in that it's gonna be 50% higher. God God willing, I live 10 more years. Um bankruptcy risk. Um I did see a story six months ago, nine months ago, one provider of adult communities structured similarly to Wysteria went bankrupt. So the people, the uh the entry fee lost. Uh the Wisteria community, they've been around since 1989. They have six other uh adult communities in California. Uh they have no debt on their balance sheet. So they've been around for what is it, uh, 30 plus years, and their uh operating experience is very favorable. And negative impact to heirs, let's put up that slide. So here's the cost um to my children, our children, if I make the move. Um let's start with the item on the left, on the pardon me, on the right. If we if I stay home, uh the market value of our home, I assumed a 4% appreciation, would be about$3 million. Our mortgage, 10 years from now, would be about$200,000. So if 10 years from now we were to pass away, the house is in our estate, it goes to our heirs, there's no capital gain tax. You get what's called a step-up and basis at death. So no capital gains tax. Let's assume it costs$150,000 to sell the home. So you got$2,760,000, less$150,000. The heirs get$2,000,000 in change. If we move to Isteria, uh, we sell the home, currently valued approximately$1,009,000. Our mortgage is currently$300,000. So we clear$1,000. We'd pay about$150,000 in capital gain tax. So we'd net$1,450,000. Round numbers, our entry fee is a million dollars. Um, so we would clear$450,000 cash to our heirs at our death. They get 75% of the entry fee, which is the$750, plus let's assume the$450 that we received is still in the estate. We've maybe lived off of income from it, but didn't spend the principal. So the cost uh from Oysteria net to the heirs is a million two. So two million six versus a million two. If we move to Oysteria, it's going to cost our children about a million five hundred thousand dollars. That just is. Well, so it's part that's part of the decision. It's not a controlling issue, but it's, you know, it's a piece of the puzzle.

SPEAKER_00 14:16

And when you're weighing this, one of the things you shared with me is in some ways it's also your enjoyment in retirement compared to leaving that money to your heirs. And that's oftentimes challenging to just even reconcile those two things.

SPEAKER_01 14:29

Aaron Powell Yeah, I mean, fortunately, the kids will be fine, whatever. Uh, and they've all said, of course, you know, dad, do what's right for you and don't worry about us. So, but you know, I wanted to build an estate, build a portfolio, and be able to pass a nice piece of change on to my kids. Sandy, my wife says, uh, you know, it's not it's not important. Let's let's enjoy it, let's spend it while we've got it. And the issue that I have to um explain is that as you deplete your principal, your income goes down, right? And if you live longer than you thought you might live, you don't have the income. So it's not a question of leaving the money in the estate for the kids, it's the fact that you want to have the money in the estate to provide the maximum income to you while you're living.

SPEAKER_00 15:14

And so you have to balance that with the goal is not to have the most money at the end either, right? So you have to find some type of middle ground to clean. Uh you had sent me, as you were going through these scenarios, a few photos that depict what life at home looks like. Do you I'm gonna share this?

SPEAKER_01 15:31

Okay, two photos. The session, the session before last, the gentleman was talking about how much he loves to float. One of my favorite activities at home is floating in my pool. And of course, I get fully dressed for that now because I'm putting my dermatologist's children through school. So I've got a hat on and I've got anyway. So I love floating in the pool. I don't think I'll be doing that at Weisteria. Plus, our pool is right outside our master bedroom. So I'm, you know, it's very convenient to go swimming. Uh, the pool of Weisteria, I'm gonna put on clothes, I'm gonna trek, and I don't think I'll be floating. Um the photo on the left is a wall unit in our family room, and you can't really make it out, but there's a lot of Dodger memorabilia, uh, family photos, uh, trinkets and stuff that as we watch television every night, I'm surrounded by memories that are meaningful to me. Now, I don't know in our new unit if it will accommodate uh a wall unit of that size. But you know, these are the the things that you contemplate and think about, and you know, will I miss it enough to make a difference?

SPEAKER_00 16:47

So putting back on your advisor hat, if anyone in this audience came to you and said, Jason, what should I consider? Like what are the main factors I could should consider when deciding whether to stay in my home or move it, or we'll talk about a few other options soon, too.

SPEAKER_01 17:00

I you know, it comes back to where we're at, and that's there are two pieces to the puzzle, the emotional and the financial. If you have a um existing support community, if your children live near you, um, I mean that's a factor. Um I have three children, one lives in San Diego, one in Corona, and one in Chicago. Um so our immediate family is spread out. Um so you have to factor that in. Maybe socialization isn't as important to you if you have a large circle of friends that you see regularly. My wife uh has a book club and she zooms two or three times a week with a girlfriend. She has three or four girlfriends that she'll have lunch with almost once a month. So the socialization for her isn't nearly as important. Um, and then of course the financial piece of the puzzle. It's expensive. Um I did a budget in preparation for the presentation, and the cost of living in Wysteria versus the cost of us staying at home, monthly cost, uh, in terms of the difference between mortgage and property taxes and pool service and maintenance and et cetera, et cetera, is about$4,000 a month difference. So that's$50,000 a year more to live at Wysteria than for us to stay at home. That's a pretty penny. Now, again, you've a good chunk of that is for uh memory care. I almost forgot. Memory care and skilled nursing. So, you know, may maybe in the long run it turns out to be not quite so expensive, um, but you just don't know. I mean, I'm a pretty healthy guy for age 80.

SPEAKER_00 18:48

Yeah. I mean, that is the biggest draw, in my opinion, is long-term care and memory care. And so from a financial planning standpoint, there's a few different things that we look at, both on the financial and the emotional side, as we're talking to clients about this, that I would just highlight long-term care being the number one. So, to get long-term care insurance today, if you're in your 60s, could cost you$10,000 to$15,000. Most people who have long-term care policies that purchase those 10 to 15 years ago, your annual cost is probably like$4,000. And they probably keep sending you mail that says lock in your price now and reduce your benefits. Please talk to us before you do that, because usually a lot of those are actually kind of scams and not a good deal. But when we look at long-term care insurance today for someone in their 60s, there's very few very good-looking policies. There's some hybrid life insurance policies that we like, some standalone, but it's very expensive. And so going to somewhere like University Village or Wysteria, that could be an option where you don't have to purchase long-term care insurance. And you would be able to kind of plan for that care as opposed to having somebody else to do that. The other financial question we get all the time is: should I move to a different state with no state tax or lower cost of living? And I'll just give you a basic kind of analysis of that. So I had someone come to me and ask me this a month ago, and they make about$150,000 of income. They asked if they should go to Nevada. So to save on their state taxes in Nevada, I'm gonna be I'm gonna overestimate. So they would save about$12,000 a year to move to Nevada. That's$1,000 a month. And I asked the question: is it worth it to move away from your family, your friends, and everything you know for$1,000 a month? That is the question that you have to ask yourself when it comes to moving to another state. Some states have lower cost of living, but you have to you have to say, Do I want to live at that place with the lower cost of living? And that's a really important factor. So I would even encourage you moving to a low-cost state or a no-state tax uh state, it might not even look as good as it it looks on paper. If you look at someplace like Texas or Austin, even, uh their property taxes are out of control. It's so expensive to live there. In addition, if you bought a property in Austin two years ago, you are probably underwater on your property today. It's gone down 10 to 15% year over year. So you really have to factor in some of these other areas. The last thing that I would mention is that I do think it's important to take into consideration how your spouse will feel. So these are some statistics from seniorliving.org. But the baseline is it is very hard to take care of a partner. It's hard to go from being a spouse to being a caregiver. And so something that I do like about Weisteria and University Village is that it does offer you the opportunity to have uh someone else be a caregiver, and you get to still just be a partner. And I think that those are all really important factors to take into consideration if if you're making this move.

SPEAKER_01 21:51

I think my wife would be a better caretaker for me than vice versa.

SPEAKER_00 21:57

Hear that, Sandy? Yes, go ahead. I'll I'll repeat the question. So the question is about the quality of the memory care was uh facility at Weisteria.

SPEAKER_01 22:14

Um honest answer is no there are three Say again? You forgot.

SPEAKER_00 22:23

You forgot to ask.

SPEAKER_01 22:25

Forgot what? Um there are three different contracts, as I understand it, with adult communities, a class A, Class B, and Class C. Weisteria is class A, which means they provide those services at no additional cost, should they be necessary. Class B, um, they provide and Varial is a class B. They provide those services, but at an additional cost, at market cost, less some kind of discount. And then I'm not even sure what a Class C community is. I I will tell you Maybe it's the one in Camriel.

SPEAKER_00 23:01

Yeah, so there's an there's a few other living, right? He mentioned Varial. You could go to Leisure Village in Camriel, which actually, if you're considering selling your home and renting, it's very reasonable to rent there, maybe 2,800 to$3,200 a month. You get all the activities, you get kind of like the fun and the exciting part of it, but you don't get the long-term care benefits of it. So that's an option, but maybe not the right option if long-term care is your number one aim. So um unfortunately have a client who just passed away in the memory care at University Village, and it was phenomenal. It was truly excellent care. Like uh, she lived there for about a year and a half. Her spouse is still on property in one in his apartment, but they they raved about the care that they received. And so I think this is an interesting option. The other thing that's really nice is that um he got to stay in the apartment and go visit her on a regular basis, and uh they celebrated birthday parties together. There was a lot of interconnectedness, um, but somebody else was doing the caring, and so that was really nice. Well, we're almost up on time. My last question for you is how do you recommend emotionally navigating this? Like any final thoughts in terms of how people should think about making this decision?

SPEAKER_01 24:18

I don't have any more wisdom to share on that subject, I don't think. It's um we went to a seminar put on by Weisteria. Um forget the stuff, keep the memories, you know, declutter. But so much of our stuff um uh is meaningful stuff. It's not just stuff. So I you know that's such an individual item, and um, you know, maybe we'll send out a notice when we ultimately make the decision as to where we're gonna live.

SPEAKER_00 24:50

My last piece of advice is just take time, talk about this before you're ready with your loved ones, with us as advisors. We can help you navigate these decisions. And um, to your point, I love University Village actually. I would probably consider living in University Village, but not right now, but eventually eventually.

SPEAKER_01 25:07

Would you consider the alternative was like staying at home and bringing in care? Right. Yes, that's actually probably um if we do stay at home, our home is um the floor plan would be very conducive to be bringing in um individual for that purpose. So I'm thinking we're near Pierce, we're near North Cal State Northridge, maybe a nursing major or somebody that in that area. So yeah, that if we do stay home at some point in time, that's likely going to be the outcome.

SPEAKER_00 25:36

Bring in care can be up to like$15,000 a month. So that is one other factor, is when you're considering these things. All right, we've run out of time. Feel free to ask Jason questions. Thank you.

unknown 25:47

Wow.