Choosing Where to Grow Old

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remodel, remodel, remodel." Overall, remodeling activity is falling at an annual rate of 4.8% in 2008, according to the Joint Center for Housing Studies at Harvard University. But the fastest-growing segment of the remodeling industry is overhauling homes for the 50-plus crowd.

Making your home a place where you can grow old comfortably doesn't mean littering it with sterile-looking devices reminiscent of nursing homes. The trend is to "universal design," which calls for safe, easy-to-use appliances that blend in with their environment. Doorknobs are replaced with handles (easier to open), lights made brighter (for aging eyes), door frames widened (for wheelchair access), and grab bars installed in the shower. "It's no one thing," says George Cundy, architect with the firm Cundy, Santine & Associates in Shoreview, Minn. "It's a combination of things that makes the difference so you can stay there."

These are the kinds of changes Irene Lehman made for her 88-year-old mother, Elise Phillips, who lives next door with four cats in a one-story house in Elizabethville, Pa. Her mother is mentally sharp, active, and doesn't like using her walker, despite suffering from osteoporosis and arthritis. She's also been deeply afraid of institutions since her husband died in a nursing home. To keep her safe, Lehman and her husband installed handrails from her bedroom to the bathroom and grab bars in the bathroom. They also built a ramp to her patio. "We spent a little bit of money for a lot of happiness," says Lehman.

Remodeling a home often involves bigger, more expensive changes. For instance, if you live in a house taller than one story, you might put a bedroom and full bath on the first floor in case stairs become tough to climb. Bathrooms can be made safer with high-quality, nonslip tile and showers that give wheelchairs easy access. Kitchen counters at different heights can accommodate sitting as well as standing. "People in their 50s and 60s often upgrade their homes and spend the most money on the kitchen and bathroom," says Jon Pynoos, professor of gerontology, policy, planning, and development at the University of Southern California. "If you're doing a major remodeling, it's the ideal time to make changes that will let you remain independent."

Some retirees simply move into a separate area in one of their children's homes, so their children remodel. Having a parent move into what is often called a mother-in-law apartment or a granny flat is increasingly popular among baby boomers responsible for both rearing young children and minding aging parents. Zoning restrictions in many single-family neighborhoods prohibit such living arrangements or make them difficult. But the trend is to relax these rules, and AARP is pushing model legislation around the country.

Pynoos converted his garage into a flat for his late father-in-law, then in his mid-70s and frail. He put in good lighting, eliminated sharp contours, and connected an alarm system linking his house with a local security company. Pynoos' kids spent time with their grandfather, who would come to their house at dinnertime. "It was the right amount of privacy for him," says Pynoos. "But he was connected to our family."

GOING IN REVERSE

If you want to stay in your home—and are struggling to find investments with stable income streams—you might be tempted to check out reverse mortgages. The idea behind the products, which are set to have a record year, is simple: They enable people 62 or older to borrow against their home's value. No repayment is made until the house is sold. Money can be taken as a lump sum, monthly, or as a line of credit.

There are a lot of drawbacks, however. Loan costs are high. Recent transaction costs for a 74-year-old in a $300,000 home were about $30,000—half in up-front fees and the rest in monthly fees over the loan's duration. Also, some aggressive marketers are hawking the mortgages along with other high-cost financial products.

A reverse mortgage could serve those who are asset-rich but need an income. For most, however, it should be a last resort. "Once it is executed, people are left with practically no alternative but to stay in the home—even though other things may have happened, such as the only helpful, caring child has moved to another city, or the house is now ill-suited for some disability," says Hebeler.

Of course, some people find it necessary to relocate. Eleven years ago, a doctor at the Mayo Clinic advised Stuart Kaufman to look for an assisted-living facility. Kaufman's wife, Sheila, had early symptoms of Alzheimer's, and the sooner they moved, the doctor said, the easier it would be for her to acclimate to her new environment.

Kaufman didn't like most places he saw—they were dark and institutional. But The Commons on Marice near St. Paul, Minn., seemed more like a resort: light and airy. He and Sheila moved in nine years ago. She's now in the memory care unit, and he visits her all the time. He lives in their two-bedroom, two-bath apartment, for which he pays more than $4,000 a month. "This has extended both of our lives in a very positive way," says Kaufman. "These could have been very difficult years."

Continuous care or assisted-living communities are the most expensive option for seniors. Entrance fees can range from $20,000 to $400,000, and monthly maintenance fees run from $200 to more than $2,500, according to the AARP. Consult a lawyer before signing the detailed contracts. "This is an option for people who really think things through," says Elinor Ginzler, AARP's senior vice-president for livable communities.

Housing options will expand even more as the population ages. But whatever new alternatives arise, decades of experience show that the primary considerations in deciding where to live in retirement are family and friends, neighborhood and community. Some things don't change with age.

Return to the 2008 Retirement Guide

Farrell is contributing economics editor for BusinessWeek. You can also hear him on American Public Media's nationally syndicated finance program, Marketplace Money, as well as on public radio's business program Marketplace. His Sound Money column appears on BusinessWeek.com.