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Merrill Lynch retirement study shows 49% of retirees are not ‘downsizing.’

By August 18, 2016No Comments

When it comes to ‘downsizing’ to a smaller home for retirement, not all homeowners are following that common route. In fact, according to a report issued by Merrill Lynch and Age Wave, 49% of retirees surveyed said they have chosen not to downsize “as their last move.” Instead, about 30% said they are moving to a much larger home, thereby affirming that they remain “confident with their investments.”

Furthermore, about 20% of the respondents said their choice of a larger home was based on a desire to not only accommodate family visits, but to allow live-in arrangements for them in the future. Moreover, about 16% of those surveyed said they had a boomerang family member living with them.

Even though a larger home can mean higher maintenance costs, association fees and taxes, the option for in-home care is highly attractive. However, other options, like assisted living and even nursing homes, still continue to fill ongoing demands.

Does Medicare or Medicare cover ‘assisted living’ costs?

But in cases where the home may not be a viable option, due to ongoing home expenses and health issues, a nursing home—or an assisted living facility—may provide care based different ‘tiers’ of medical need. In short, the more ambulatory a senior is, the more likely their overall costs will be cheaper.

Continuing Care Retirement Facilities—CCRCs

The idea of paying a one-time ‘entry fee’ along with monthly payments may not sit well with some retirees, but CCRCs do provide progressive care tied to levels of assistance needed, including around-the-clock care.

Using the 401(k) for medical assistance

Having a long-term care (LTC) policy can help reduce the costs associated with nursing home care, as well as certain levels of assisted living and in-home assistance. In fact, the IRS does have an existing hardship withdrawal rule that allows for tax-free withdrawals from a 401(k) to pay those “significant medical expenses.”  

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