Steamboat Springs It isn't uncommon to bump into an acquaintance at a cocktail party in Steamboat Springs, exchange exclamations about how the value of each others' homes have skyrocketed and then agree that your real estate represents your retirement nest egg.
How realistic is it to expect to retire on the equity in one's home?
A group of experts in the field of financial planning, mortgage lending and aging spoke on that subject Thursday at the Steamboat Springs Community Center.
"The attitude you always hear is, 'I don't want to move out of my home,'" Catherine Lykken told a group of citizens. "When you've been in a place for several decades, there's really a lot of stuff, isn't there? Even people I counseled who were living in nursing homes - their goal was to move back into their home."
Lykken is the organizer of a series of three seminars dealing with financial and real estate planning issues facing aging baby boomers and seniors living in Steamboat's pricey real estate market. She is both a former social worker specializing in issues for the elderly and a Realtor.
Often, financial planner Dan Foley said, staying in a single-family home isn't the best option for seniors.
"Sometimes, when you stay in your house, you sacrifice quality of care," Foley said. "As a result, quality of life goes down and people sometimes start to give up."
Foley is a partner in Sleeping Giant Financial Services in Steamboat.
"Among people who have lived here for 20 years, it's common to find that 50 to 75 percent of their net worth is in their home," Foley said.
Making deliberate decisions to move out of a traditional single-family home is complex both financially and emotionally, Foley said. But it's always an easier decision to make if an individual or couple has been planning many years for the day that eventually arrives.
"It's funny how we can see our friends getting older but it can be difficult to see our selves getting older," Foley said. "If you don't plan, the plan will come from the world and you won't have any control over it."
He recommends that people investigate the purchase of long-term care insurance by the time they reach their mid-50s in order to access lower premiums.
"Long-term care insurance is expensive, but you'll get quality of care," Foley said.
Long-term care insurance most often makes sense for people whose assets range from $200,000 up to $2 or $3 million. Above and below that range, he said, the coverage may not make sense.
Holly Rogers, a vice president and loan officer with Capital Mortgage Advisors, said many Steamboat homeowners imagine they will sell their single-family home and downsize into a smaller condominium. It's easier said than done.
"Downsizing is difficult in this market," Rogers said. "There's just not that opportunity right now because the condo market is appreciating so rapidly."
Lynn Reiff, a consultant with Wells Fargo Home Mortgage, said some people are in too big a rush to retire their mortgage.
A modest mortgage at favorable rates makes it more convenient to tap into the equity in a home during retirement, she said.
Reiff and Rogers will discuss strategies for tapping into home equity through a reverse mortgage during the next seminar scheduled for 9:30 a.m. Sept. 7 at the Community Center.