What constitutes a comfortable retirement looks different for everyone. While some plan to move overseas in search of warmer temperatures, many wouldn't give up the comfort of having family close by, or leave a familiar community. Regardless of your dreams and aspirations, it is important to plan ahead to take into account different considerations.
One of the most important questions in this process is: where will I live when I retire? Living arrangements have a considerable impact not only on financial security but also on overall well-being. As the demographics of our population continue to shift, so do the preferences and needs of retirees looking to enjoy the next phase of their life.
What to expect if you're retiring soon
The current retirement model heavily relies on three pillars.
The first is equity release schemes, where homeowners aged 55 or over can access tax-free cash from the value of their property as a source of income. While these schemes offer a relatively easy way to access funds, convenience may come at the cost of high-interest rates and fees, reducing the amount of inheritance that can be left for the next generation.
Downsizing is also often considered as a means to free up cash in retirement. However, finding suitable and affordable smaller properties can be difficult, especially in areas with high housing demand. Additionally, the costs associated with moving, including legal fees and agent commissions, can eat into the potential gains.
Finally, some retirees and their families opt for care homes. As the population ages, demand for quality and alternative care facilities is increasing, leading to steep fees that are not always covered by government assistance.
Shaping retirement living for the future
In order to address the current structure's pitfalls, the retirement living landscape is rapidly evolving to offer not only viable, but desirable options.
With risk of isolation as one of the main concerns, there has been an increased focus on offering housing options that foster the creation of communities, promote inter-generational co-living and cater to the needs and desires of individuals.
As the demand for more exciting, flexible, and diverse housing grows, there will certainly be nuances in the types of models available. But based on current trends, how will retirees be living in the decades to come? From my experience advising in this field, these are my predictions:
- Staying active in retirement will be a priority
The rise of multi-purpose retirement living schemes reflects a growing desire among retirees to maintain an active and diverse lifestyle.
These developments offer a wide range of on-site amenities and services, such as fitness centres, restaurants, cultural spaces, and healthcare facilities, which can create a vibrant community for residents.
By providing an all-inclusive living experience, these schemes cater to the evolving expectations of retirees who seek convenience, social engagement, and a sense of belonging.
- Renting by choice – a search for increased flexibility
Unlike traditional retirement housing, which often involves property ownership, multi-purpose schemes are typically available for rent. Renting allows retirees to enjoy the benefits of a specific community or location without the financial and maintenance burdens of homeownership.
This flexibility is particularly appealing to those who wish to explore different living arrangements or locations as their needs evolve.
Renting also eliminates concerns related to property management, repairs, and unexpected costs, offering a hassle-free lifestyle for retirees.
The number of options for retirees and later living will continue to increase and improve as we move from the requirements of Baby Boomers to those of Gen X, who are likely to have greater expectations and demands for more flexibility in how they wish to live in retirement.
If you're planning for your retirement, or helping a family member to do so, please contact us to discuss the legal implications of different types of housing arrangements.
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