By Jean Newton

With shrinking portfolios and diminished retirement funds, baby boomers are taking a second look at the equity in their homes as they begin the retirement planning process.

With a strong real estate market continuing to boost appreciation, many homeowners have built up a significant nest egg over time. Now that the children are out on their own, the equity in their home might be the best bet for a secure future.

“With the kids gone, the aches and pains amplifying and retirement nearing, those once-fulfilled household maintenance duties such as lawn mowing, roof fixing, fence mending and cleaning may be getting less therapeutic and more laborious,” said Jim Magill, an agent with Village Square Realty.

Magill finds many seniors facing a financial decision as they determine whether to keep their homes and “age in place” or make a change in living quarters and lifestyle.

“Seniors are pondering a ‘right-sizing’ to new quarters that will better fit their lifestyles, proximity to loved ones, as well as their health and wealth needs,” Magill said. “Many of these folks have been living in their homes for 50 years. They bought a nice little place for $50,000, and it is now worth $1 million or more and they often can’t believe it.”

In addition to consulting financial, legal and other professionals as the retirement years loom, baby boomers need to take the time to analyze their lifestyle to find out what they like about their current situation and what will become most difficult as they age. Some factors might include the cost of maintaining a home, how easy it is to navigate if many steps or a second story is involved, whether it’s close to public transportation if they can no longer drive, and how important it is to be near quality medical care and family and friends. Security is also often an issue for those who live alone.

One housing option many baby boomers consider as they start planning for their future is retirement community living where security, maintenance and health care are provided.

Broker Roseann Rose, a designated senior real estate specialist, handles membership sales at The Forum at Rancho San Antonio, a resident-owned continuing care retirement community in Cupertino. She finds many seniors have built up substantial equity in their homes but aren’t aware of the options available to them. Others are fearful of making a move from the home they have lived in for so many years.

“Many people lose sight of how much equity they have in their homes. Once they realize how significant it is, they don’t want to lose it. People want to enjoy the fruit of their years of hard work and still leave a nest egg to their families,” Rose said. “The Forum is one of only a few retirement communities in the Bay Area that offer a unique business plan based on equity ownership so people have an opportunity to preserve their investment to pass on to their children.”

The Forum’s plan allows people to purchase a membership interest in The Forum’s non-profit stock cooperative. The plan is designed to provide a return on the original investment plus a share in the appreciated value of equity when sold. The Forum also provides continuing care with assisted living and nursing care at the community’s on-site health care center.

Rose explained that The Forum is more affordable than most people think, with memberships for one-bedroom apartments starting at approximately $200,000 and corresponding monthly fees for a single person at $2,059. Although there is a waiting list for some of the apartment homes and villas, memberships are available and vary in price depending on the real estate market and other factors.

“Once people move to The Forum, they realize what a great advantage it is to own real estate in this valley without the responsibilities of home ownership. At The Forum, they don’t need to worry about fixing meals, doing laundry and taking care of dreaded maintenance issues. While keeping one eye on the future by having the security of health care so they won’t be a burden to their families, they often have more self-reliance and independence,” Rose said.

Rose recommends seniors begin looking at all their retirement options as early as possible, because many communities require a health assessment before admission.

“You are never too young to enjoy all the activities and the broad spectrum of new relationships. Don’t wait until it’s too late. Come when you can enjoy the freedom of travel, exercise and the richness of a fuller life,” Rose said.