Retirement: Don’t Overdo It

A few weeks ago, Doug did an online search for “top retirement issues.” The results were not surprising and rising to the top of every list was financial issues. In essence, make sure that you have enough to retire on comfortably.

stacks of money all over the picture.

He took away from those articles a plan to expect the unexpected, as many surprises can occur in our 60s and beyond. The following is a quick snapshot of actual numbers for a person retiring.

  • Let’s say that Sally is about to retire and currently earns $100,000 a year
  • Assume Sally does not have any kind of pension
  • The rule of thumb says Sally will need 80% of her pre-retirement income
  • So, how does Sally get to $80,000 a year in retirement income?
  • Let’s assume her Social Security is $3,000 a month or $36,000 a year
  • That leaves a shortfall of $44,000
  • If Sally has $1,000,000 in stocks, she will need a 55% return annually or $50,000
  • This equation stipulates that Sally does not touch the principle
  • This would provide Sally with $86,000 a year

Here are the significant variables that could influence the above scenario:

  • Sally will need to receive a 5% return annually. More is better, however, if the market tanks. Sally will have to dig into her principle probably. That means Sally will have to rebuild that principle soon.
  • Sally’s most significant variable is her health, as her insurance and Medicaid do not cover 100% of her bills. A couple of unexpected hospital or doctor visits can quickly cause Sally to dig into her principle.
  • Children, siblings, parents, and grandchildren can also easily add to Sally’s financial obligations, as family issues can come out of nowhere and cause significant short-term and long-term financial constraints.
  • Managing debt can also be a silent killer for many. Piling up credit card debt, in particular, is more common than most of us think. Plus, the costs associated with purchasing a new home or car can also increase debt dramatically.
  • Gifts. It is pretty standard for grandparents to want to support their children and grandchildren. This could be money for a house down payment, a car, college tuition, and more. Plus, many people like supporting their church, alma mater, civic organization, etc.

In essence, most retirees live on a fixed income. There are no more overtime hours to count on, quarterly or annual bonuses, pay raises and promotions, etc. And while inheritances from parents or other relatives can happen, it is wise not to count too much on them for unexpected expenses can severely curtail your possible windfall.

Over the years, Doug has seen some retired people forced to make tough decisions regarding their finances. He guesses that they did not invest enough time and effort into laying out their expected and unexpected costs – aka budget. The results ran the gamut of selling their Dream Home and downsizing, moving back home, and getting back in the job market.

You’ve worked hard for 30-40 years, building up a nest egg so that you can retire comfortably. One last variable that can affect your financial stability is managing your ego.

yellow expensive car on left, white boat on right on the water speeding

Let’s fast forward to your retirement day, and you have $3.5M with a stockbroker, half a million in your savings, and your $475,000 is paid off. You’re rich, rich beyond your wildest dreams, and it’s time to pound your chest a little bit and let the world know so that you can go on a bit of a spending spree. Sure, you may only spend $40,000 (or more) on a new car, boat, jewelry, artwork, or a trip around the world. But for the most part, that was an expense that is either gone or probably severely devalued the minute you laid down your American Express Platinum Card.

We’ve seen professional athletes for decades sign multi-million-dollar contracts only to find out years later that they have nothing left. Be careful not to allow your ego to ruin your retirement because it can and will. Don’t become a statistic of poor judgment.

When we look back at the slide of 2008/2009, many people said that their retirement planning was sound and they were safe from unknown variables. Let those who suffered so mightily be our guiding lights to live a long and prosperous future! If you’re ready to sit down and find your dream retirement home here on the beautiful coast of North Carolina, we’re here for you.

The Martini Theory: Part 2 of 3 “Finding the Right Community”

Years back when devising the Martini Theory, Dough really didn’t understand at the time that the three components were listed in order of importance. He knew them as the three steps of the funnel but was unaware that they were positioned from most important to least important.

As pointed out in last month’s article on the Martini Theory, the most important aspect of one’s search for a place to retire is clearly finding the area that best meets your needs. Those include but are not limited to weather, beaches, location, dining, entertainment, medical services, shopping and more.

Once an area has been scouted and agreed upon, moving to step 2 of 3 is critical to your retirement happiness. Here are some helpful tips on how to match up a community with your personal interests.

Research

Having the internet at our disposable 24/7 is an amazing advantage that we have over our parents and grandparents, who retired to Florida based upon very little information. The old adage of “boy, do I have some nice, dry land for you down here in Florida” was way more truthful than myth, as how did anyone really know if they were being fed a line of lies?

That being said, if you have a community or two or ten in mind that you like, get on your computer and start researching. If a developer today is not satisfying their residents, you will know about it in 10 minutes. When people are not satisfied with something, they use the web to express their opinions. On the other hand, you do have to take everything you read in stride, for no community ever has 100% of their residents fully happy.

Be sure to also research the developer of the community, even if they are no longer involved. A 15-year old community where the developer left five years ago can be in as much of a pickle as one that is only two years old and having financial difficulties. Developing raw land is a massive physical and financial undertaking, and many have left behind significant wake.

The Older a Community Is…

A Dougism from years past indicates that in general, the older a community is, the older a community is. What? If a community opened in the late ‘80s or early ‘90s, one must understand that what is inside the community tends to be older. Examples are amenities (pools, tennis courts, building), roads, clubhouses, home/floorplans and very possibly, people.

So, if you are 58 years old and looking for a “Young” community, you may want to thoroughly research which community has more contemporary people such as yourself. Of course, we are speaking of generalities here, but if you move into a community where everyone is building a home at or close to the same time, chances are you can also grow with that community. On the flip side though, you have to endure the growing pains of that community in terms of construction and in some cases, waiting for amenities to be built.

Activities

The majority of clients we work with are moving to Coastal North Carolina only knowing a few, if any people. Therefore, making friends is paramount and for one of the best ways to do that is finding clubs or activities within your community.

Examples might be golf groups, bridge clubs, exercise classes, tennis & Pickleball lessons, planned social events/parties, Mahjong and Canasta groups, traveling/dining clubs, quilting groups, fishing expeditions and so on.

Be sure to ask to see a list of clubs and groups that a community offers before you consider investing into a community, as this will provide you with an excellent understanding of whether or not there ae like people in your potential future community.

Fees

Just about every community that offers an active lifestyle has HOA and POA fees, and it is important to fully understand them before signing on the dotted lines. A Property Owners Association (POA) is generally the fee you pay for being a part of a community. POA fees typically include your portion of the Amenity Center, common grounds maintenance, possibly some utilities, etc.

Homeowners Association fees are for the home you live in. Depending on whether you have a single-family home, condo or townhouse, your fees could include lawn care, outdoor home maintenance, common ground maintenance, insurance and so on.

As always, be sure to consider the source of information you are receiving on a community. You have worked non-stop for 30-40 years, possibly raised kids, cured famine in foreign countries, invented the internet and built bridges across oceans – so the last thing you want to do is retire to a community that doesn’t meet your requirements, for that mistake can be a timely and expensive proposition. Best of luck!

The Martini Theory: Part 1 of 3 “The Area”

If there was one message and one message only that Doug could pass along to everyone who is looking to retire, it would be spending a pile of time researching the areas you are considering. Nothing else matters, for if you get the area wrong, it will be one of the most frustrating, embarrassing, and expensive lessons in your entire life.

Douglas S Terhune, being the (most) sound mind and body, is the author of “The Martini Theory.” If you employ this simple analogy of your search for a place to retire, you will be rewarded with a happy retirement. If though you think you know better, then you are on your own.

All of us who have worked for the past 30 – 40 years have become good at something. Heck, Doug might go as far as saying that most of us have become very good if not even excellent at something.

Well, for nearly 20 years, Doug and his fantastic team of Brokers have had the immense pleasure of assisting great people with determining if Coastal North Carolina meets their retirement needs. During this time, the greatest failure Doug has encountered are from people who did not research the area around their amazing home and community and wound up stuck there until they could sell their home.

There is no single more important and sage advice than the following, with regards to finding a place to retire:

Research the area(s) you are considering with the enthusiasm that you invested in your job and raising children.

 Why such a fuss over this? Simple, because too many people get in the car or hop on the plane and head south or west and haven’t thought about their big move from a cerebral point of view. Instead, we see it happen all the time where a couple gets caught up on the sex appeal of a (new) home and the proximity to the mountains or the ocean without considering the community location.

Let us put it to you another way:

If Doug were rich and gave you an amazing home in a beautiful community for free, but you were 45 miles (2-hour round trip) from a hospital, movie theater, mall, Outback Steakhouse, hair salon, etc…would you be happy? (And let’s not forget that you will be in your 60s, 70s or 80s.)

What is outside your future retirement community is as important as what is inside your community. Most all communities here have an assorted combination of pools, tennis courts, golf courses, restaurants, Pickleball, walking trails, and exercise classes, but at 75 years of age, do you want to be traveling two hours round trip for every doctor’s appointment or to see a movie?

Another myth buster is thinking that you must live really close to the beach. The reality of life is that when you retire, you (two) are going to walk on the beach for 3 hours a day, holding hands and reminiscing about your pasts. We think Not! Unless you are a true beach nut, it is safe to say that if you move to any coastal area, for every one time you pull out of your driveway and head to the beach, you will pull out of your driveway 150-200 times and head to your exercise class, pottery class, friend’s house, grocery store, drug store and more.

Seriously, can anyone relate to that? I mean, for those of you who live within a 45-minute (normal) drive to a medium-to-large city, when was the last time you drove in for dinner and a play, or took in the latest exhibit at the museum? Or how about driving into the city for a hockey game or doing some window shopping on the boulevard?

Having a grocery store, hardware store, doctor’s offices, nail salon, restaurants, pizza parlor, bagel shop/deli, pharmacy, and so on, near your home is of HUGE importance. These are the things you NEED daily. Having the things, you like such as a mall, fine dining, live theater, Whole Foods, Target, Costco, etc., close by is great, for you do not tend to utilize those places nearly as often.

This honestly not being boastful but, Doug cannot tell you how many times people have said to him, “Oh, you are the man who came up with the Martini Theory and well, we Love the Martini Theory!”

To prove to you how much our entire team believes in the Martini Theory, the first thing we do when we receive an inquiry from someone is to send them a personalized Coastal Guidebook. This one-inch binder is crammed full of chamber of commerce-type information on shopping, medical services, dining, beaches, weather, golf, entertainment, and so much more.

Why has our team sent out 518 Coastal Guidebooks in the first half of 2020? Because we want to help familiarize you with our area, for if Coastal NC is not your cup of tea, then why would you waste time looking at homes?

In essence, if you do come for a visit, our first 2-3 hours with you will be spent showing you the area. We are going to drive by the malls and hospitals while pointing out the best restaurants in town. We will kick you out of our vehicles at the beaches so you can put sand between your toes and perhaps take a picture of the beach and send it to the kids because, what kid isn’t going to want to visit you if you live near the beach, right?

More than likely, there is not another real estate company, developer, or builder that would spend 10% of the time talking to you about the area because, in their opinion, that is counter-culture to do their jobs, and that is opening up doors and selling homes. At Carolina Plantations, we have earned the title of the #1 Retirement Experts by providing you with the information you require to make informed decisions. It’s just what we do.

Crash Course for Northerners

Crash Course for Northerners

Doug’s Freshman year at University of Tennessee, a long, long time ago…., and Professor Spivey, his Economics 101 teacher, is being broadcast to about 100 Frosh via 6 TVs in a large classroom. He was very southern and said that he wanted to teach them Yankees a few things. First, he would ask us Yanks to raise our right hands and keep them up. He then would say to the southerners in the class to take note of who these hand raising folks are because hey, how can Prof Spivey know who has their hands raised since he is teaching the class remotely via TV?

Point taken Professor.

Next, he said that he was gonna say something in his East TN dialect and wanted to see if any northerners could figure out what he said. So, Doug’s leader says “Igots fer terse en ma ker” . He repeats and those who are from the land of snow and real pizza look at each other a bit bewildered until Mr. Spivey slowly enunciates “I got four tires on my car”.

For those of you who lives above the Mason Dixon line and are considering a move to the south in your future, we have compiled a few southern phrases and acronyms that might, just might help you navigate your way in these parts. Now, some are related to real estate and some don’t have a dang thing to do with real estate but, y’all just never know if one day you’ll have need for these translations, will ya?

Fun Southern Sayings

Six of One, Half Dozen of the Other – A common statement professing that it’s a 50/50 call

Give Me Some Sugar – No, not that kind of sugar, but give me some sweetness, aka a hug, kiss, etc.

OncetUsed in a sentence: Oncet I climbed a tree

Well Bless Your Heart – When said by a southern woman, generally she is referring to you as a dummy

You’re a Hot Mess – Simple translation means that you just aren’t right!

Holler – Nope, the other holler, as in “they live down yonder in the holler”, which is generally a valley or tucked away piece of land down south

He Ain’t Right – While as southern of a statement as you can find, it translates equally into Yankee

Southern Real Estate Sayings

F.R.O.G. – We do not have basements in the south but, we do have FROGs. These are the Finished Rooms Over Garage, otherwise known as Bonus Rooms. (Men often refer to FROGs as their Caves!)

POA – If you move south of the Mason Dixon, it’s a safe bet that the community you live in will have a Property Owners Association – which takes care of amenities, billing, gates, disputes, rules, etc.

ARB – The Architectural Review Board is the group of people that you hand in your home designs to and they hand it back to you and your designer/builder with all kinds of love notes and suggestions at correcting/improving your home

SubdivisionIn the south, this is a community that generally has a pool, two tennis courts and small clubhouse. These communities generally attract young/er families and, some retirees

HOA A Homeowners Association is typically in place when you have condos or townhomes, as this organization oversees the homes themselves (as in shingles, landscaping, painting, etc.)

Plantation – Some Marketing person began this terminology years ago for a community that is chock full of amenities such as golf course/s, pools, tennis courts, fitness center, exercise classes, parties, etc.

Carolina Plantations – Synonymous with the best damn real estate company on the planet that helps people discover all the great Plantations/Communites that we have here in Coastal North Carolina!!

Gated Community – Main focus of a gate is to increase sales. When the developer leaves, usually so do the guards – which are replaced with key fobs (FYI. A 24 hour, 7 Days a week Guard costs the homeowners $100,000 or more per year. Ouch!)

We can only hope that these few sayings above will help you as you transition to the area. If you are still looking for the perfect home and community, allow us at Carolina Plantations to help you out. We can give you all the best details on which community is right for you and your family! We hope to see you soon and we know you’ll be able to catch onto the southern talk in a jiffy.

Breaking Down 55 or Older Communities

Age restrictive communities have been around for years. Some folks have just had their fill of kids and don’t want to share their community with children after 5pm. In general though, children are permitted in age restrictive communities but, there are rules that must be followed.

The below pool policy for visiting grandchildren was taken directly off the website of a large adults only community in the southeast. Go ahead and read it:

What are the rules for visiting grandchildren?
Children under the age of 19 may be a guest a maximum of 90 days in a calendar year. Children must be at least 4 years old and potty-trained to use any of the pools. Children ages 4-16 years of age are welcome at all pools during children’s hours only and must be accompanied by a supervising adult (non-guest). Pool monitors are present and may answer any questions or concerns.

At a glance this really sounds ok however; the whole premise is that kids up to 19 years old must be accompanied by adults in all pools and only during times where young ones are permitted to be in the pools. Well, so much for Grandma & Grandpa headed to the pool after dinner for a quick swim with the grandchildren!

Since it would be an exhaustive search to find the correct answer, my 12+ years of working with people who are looking at Southeastern NC to retire to provides me the luxury of making an educated guess on this question: What percentage of people retiring in the southeast retire in age restrictive communities? Answer: Less than 5%, or perhaps considerably less than that.

So just what is the draw to age restrictive communities? Noise for one is the #1 driving factor, and nuisance is a strong second. To each his own and who is anyone to judge if this is the lifestyle someone chooses, correct? Again, the percentage of adults moving into these types of communities is a fraction of the retiring public.

Everyone knows that Del Webb is a branded name synonymous with age restrictive communities

_______________________________

so I found the age restrictive policies for Sun City Summerlin/Las Vegas:

55 Year Age Restriction Policy per
The FAIR HOUSING AMENDMENTS ACT of 1988 (the “Act”)
HOUSING FOR OLDER PERSONS ACT 1995: FINAL RULE
(Department of Housing and Urban Development: 24 CFR Part 100)

INTRODUCTION
The Fair Housing Act (Title VIII of the Civil Rights Act) exempts “housing for older persons” from the Act’s prohibition against discrimination because of familial status. Section 807(b)(2) ( C ) of the Act exempts housing intended and operated for occupancy by persons 55 years of age or older which satisfies certain criteria HUD has adopted implementing regulations further defining the “housing for older persons” exemption at 24 CFR part 100, subpart E (Housing for Older Persons Act, hereinafter: HOPA).

There are 4 factors required for a facility to claim the 55 and older exemption:
(1) that the housing be intended and operated for persons age 55 and older; (24 CFR 100.304)
(2) that at least 80 percent of the occupied units be occupied by at least one person who is 55 years of age or older; (24 CFR 100.305)
(3) the housing facility or community must publish and adhere to policies and procedures that
demonstrate its intent to operate as housing for persons fifty-five (55) years of age or older. (24 CFR 100.306)
(4) the housing facility or community must also comply with rules issued by HUD for the
verification of occupancy. (24 CFR 100.307).

Sun City Summerlin is qualified for the exemption as a community for 55 year or older persons. The intent is stated in the Sun City Summerlin Community Association, Inc. CC&R’s (Article 4.2 (a)) and By-laws (Article 2.1) as well as by the age restriction rules adopted and enforced by the
Association. This document’s purpose… READ MORE

So does that mean that 95% of those retiring are living in communities without age restrictions? Yes, the answer is Yes however, there is an however. Since I know Brunswick County quite well, let’s do some exploring on how we have so many retirement communities here without any legal age restrictions yet, most everyone seems to be perfectly happy with the lack of policies.

There are over 20 Plantations in Brunswick County – and in case you are not aware of the marketing lingo by developers, a “plantation” is a community that has very nice amenities such as pools, tennis courts, golf course, fitness center, activities, etc. The draw to Brunswick County is weather, beaches and affordability – along with the myriad of plantations to select from.

Brunswick County historically has served various service industries, such as golf, beach, restaurants, hotels and general tourism. If you break that down, the overwhelming majority of workers in our area are hourly, and that means that their price range for a home hovers around $100,000 with both parents working (combined annual income would range from $30,000 – $50,000). We have a true absence of white collar jobs here, as there are virtually little to only a few “Class A” office buildings within the county.

The average single family home starting price in the 20+ plantations is over $200,000, and that knocks out an incredibly high percentage of young families. Therefore, since plantations are not economically feasible for so many young couples, the population of retirees dominates the landscape. And therefore the number of young children living inside these plantations is often almost zilch.

So, while we do not have official documents banning children from our public areas, streets, sidewalks and community amenities, we really don’t need them. Sure there might be a sprinkling of children in all plantations but it seems that the higher the price is of the average home, the less children you see.

As a general rule, our plantations here are grandchildren/children friendly plus, let’s unfortunately not forget about how many kids are moving back home and often with their children! And remember, you can only keep kids locked up in the house for so long! 🙂

Age restrictive communities have their place in the food chain of places to possibly retire to, so if you are averse to sharing your community with young ones, then you have some options up and down the east coast. WC Fields once said when asked “How do you like children”, to which he replied “Medium Rare, Medium Rare”. In Brunswick County, we welcome grandchildren yet we do always recommend to build your guest rooms to be comfortable BUT, not TOO comfortable! 🙂