Smart Moves

They're called "upsizers." They're seniors nearing retirement who aspire to the ownership of a larger, more luxurious home to enjoy in their golden years. But can they afford to increase their housing costs without sacrificing their retirement security?

Personal finance experts say that the answer hinges on a few points: Have the upsizers in question amassed a large retirement nest egg? Are they due a traditional "fixed benefit" pension? How much income do they expect from Social Security?

"One very important factor is when you expect to file for Social Security. The longer you wait -- up to age 70 --the more money you'll get every month," says Eric Tyson, co-author of "Personal Finance for Seniors for Dummies."

Most people claim benefits as soon as they're eligible, at age 62 for the current generation. But Tyson urges people to consider waiting until their "full retirement age" of 66 to stake their claim, or better still to wait until age 70 to obtain significantly higher benefits.

Andy Landis, author of "Social Security: The Inside Story," says many people who could afford to hold out for larger Social Security benefits don't understand the implications of filing their claim at age 62 when they're first eligible to do so.

Landis, who conducts retirement planning seminars for large employers and financial planners, acknowledges that many people claim their benefits at age 62 simply because they're strapped for cash to meet current expenses. But he says others file early out of fear that Social Security will run out of funds, a fear he dismisses.

"It would be political suicide for Congress to end a program for current retirees that's so tremendously popular," says Landis, who blogs at www.retireusa.net.

Mark Miller, author of "The Hard Times Guide to Retirement Security," who blogs at www.retirementrevised.com, says that the decision is a personal one, involving such factors as personal health and desired quality of life, and that it must be made carefully. If you have a poor life expectancy or want to travel while you're still relatively young and spry, filing early may be the way to go.

Shawn Koch, a certified financial planner, says if they can afford to wait or can use other income to fund their needs and plans, most seniors are better off waiting to age 66 or even 70 to begin collecting benefits.

"Remember that Social Security is inflation-adjusted, and, once you file, you'll get risk-free benefits for the rest of your life. It's really a kind of longevity insurance," says Koch, who's part of the Garrett Planning Network.

Here are a few pointers for retirement age homebuyers:

-- Think holistically about your retirement income needs.

Tyson, a former financial adviser, recommends that before they start shopping for a better home, seniors work through their retirement budget with an accountant or financial planner. Alternatively, they could create their own budget by using one of the free retirement income calculators available through such investment companies as Vanguard or T. Rowe Price.

When calculating how long they'll need retirement income to live, Tyson encourages most seniors to assume they'll have a long life, which is increasingly likely. Social Security Administration data show that the average 65-year-old can now expect to live more than 20 years longer. That compares with 14 years for a 65-year-old in 1940.

"It's critical that you think about your retirement income needs for years ahead -- especially if you don't have a large investment portfolio. This is especially important if you're not due for a pension from your employer," Tyson says.

-- Factor in the related costs of upgrading your housing.

Koch says many seniors fail to take into account the related expenses associated with upsizing or taking on ownership of a second home.

"Keep in mind all those extra upkeep costs for a bigger home or vacation property. Also remember you'll be spending more for furnishings, taxes and insurance," Koch says.

-- Remember that your real estate plans are also tied to your quality of life.

Have you long been attentive to the need to save for your retirement years? And have you also invested your savings carefully? If so, Tyson says Social Security could represent a relatively minor element in your retirement income plan. Those with sufficient savings to meet current living expenses can wait until 66 or even later to start collecting their benefits. In addition, they may be able to afford to buy a better home or vacation property without reliance on Social Security.

Tyson says such homebuyers can now take advantage of very reasonable real estate prices, which will likely increase as the economic recovery progresses.

As he notes, some financial planners are biased against the idea of buying real estate in the years prior to retirement. After all, many planners (except those who work on a fee-only basis), make their living on commissions from the sale of investment products and insurance, not real estate.

But Tyson says people who've saved substantial retirement funds or who are entitled to benefits from a traditional pension, or both, could now be well positioned to buy real estate.

"Although you need to look at the numbers, there are also qualitative factors to consider. If you can afford it, it's always wonderful to fulfill your retirement dreams, including those involving a better home," he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

As the economy heads toward recovery, the number of road warriors -- people who travel constantly for work -- is rebounding dramatically.

"Business travel is back with a vengeance," says Chris McGinnis, an expert on the topic and director of the consulting firm Travel Skills Group (www.travelskills.com). Are you a road warrior -- someone who does at least 10 business trips annually? And are you also a prospective homebuyer who seeks a location that will enhance, rather than detract from, your hectic lifestyle?

If so, McGinnis says that in the ideal world, you'll move to a region with excellent airport access.

While air travel for business is increasing, the vast majority of business travel still involves driving. Among those traveling often by highway for work are consultants, pharmaceutical company representatives and many salespeople.

Alan Pisarski, an expert on road travel and author of "Commuting in America," recommends that car-bound road warriors choose a location with relatively easy access to major highways, ideally in a mid-size city that's normally free of traffic congestion.

"The first rule is to be in a suburb near an interstate highway so you can get on your way quickly without having to fight your way through colossal city traffic," says Pisarski (www.alanpisarski.com).

Here are a few home-buying pointers for road warriors:

-- Factor time and stress management into your equation.

It's no secret that stress is a major factor for those who travel frequently. That's doubly the case if both partners in a household have demanding travel schedules.

Business travelers typically know how many days per month they must devote to trips. But some fail to factor in the required preparation time for their trips and the time needed to decompress after the trip is over.

In advance of a house-hunting expedition, Merrill Ottwein, a real estate broker and a past president of the National Association of Exclusive Buyer Agents (www.naeba.org), recommends you write down the specifics of when and where you travel, doing a tally of the hours you typically expend. This will help you foresee how much time and energy you have left for ground transportation hassles and domestic chores.

"You simply have to be realistic about your scheduling limitations," Ottwein says.

-- Consider a "hybrid" home community.

A majority of homebuyers favor the idea of owning a classic detached house. They enjoy the privacy and sense of control that comes with full ownership of four walls.

But you don't necessarily have to forgo your single- family home dream to obtain some home maintenance conveniences associated with life in a subdivision with upkeep services, says Sid Davis, a real estate broker and author of "A Survival Guide for Buying a Home." He recommends you consider a new "hybrid home" community.

As an added plus, hybrid home communities typically give you an added element of security that helps lessen fears that a break-in could occur while you're away.

-- Look for a neighborhood where residents are mutually supportive.

Because it's a refreshing contrast to their hectic routine, some business travelers seek out a peaceful country setting for that get-away-from-it-all feeling when they're home.

However, Ottwein says living in a rural area is usually a poor choice for frequent travelers.

"If you're single and out on the road, you'll always worry something will go wrong back home and there will be no one there to handle the problem. Alternatively, if you're married to a stay-at-home partner, that person could get very lonely living out in the country while you're away traveling," he says.

Ottwein recommends that business travelers consider a neighborhood where the homes are close together and most residents are friendly and approachable.

Ottwein says it's surprisingly easy to determine if a neighborhood is welcoming or standoffish.

"Find a weekend day when you can walk through the community and talk to residents. Ask them about the pros and cons of living there. If people give you a cold reception, take that as a red flag," he says.

-- Seek out a cul-de-sac setting.

Some sharp business travelers know a secret for finding a home where neighbors relate well and are mutually supportive: move to a cul-de-sac.

"A cul-de-sac is a sociological unit just above the family. It's a quiet zone where everyone socializes. Usually, people living on a cul-de-sac help each other out, which can be great for the business traveler," Ottwein says.

-- Think through your particular ground transportation needs.

With each year that passes, Ottwein notices that traffic congestion is a larger and larger concern for his road-warrior clients.

"Whenever possible, my clients love to live near a rail line that can speed them directly to the airport without agonizing over nasty traffic issues. Rail is usually more predictable than road access," he says.

Of course, those in sales and marketing jobs who cover a regional territory typically can't take advantage of rail lines to offset the hardships of driving in traffic-ridden areas. Even so, they should still concern themselves with the best possible access to major highways.

"Business travelers who count on roads to get them to clients and meetings ideally will live at a crossroads point between two major highways. That's a lot better than living way off the beaten path," Ottwein says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

Most real estate markets across the country are in a steady state of recovery, with home prices still rising and foreclosures falling closer to pre-recession levels. But in other neighborhoods, signs of distress linger and a fair number of vacant homes still languish unsold for lengthy periods.

If markets are tepid, it's due to "weak fundamentals," according to Daren Blomquist, a vice president at RealtyTrac, which follows real estate trends throughout the nation.

Ironically, some areas that are facing better job numbers are simultaneously experiencing a surge in foreclosures. Typically, these are jurisdictions where homeowners, taking advantage of legal protection, are able to resist foreclosure for a considerable time.

Assuming the area where you plan to buy is facing a belated wave of foreclosures, he says you might benefit in terms of price.

However, he urges those interested in purchasing a foreclosed property to exercise caution, because many bank-owned homes stand vacant for a lengthy period before they're put up for sale.

"During the foreclosure process, many homeowners let their homes deteriorate. And others engage in active destruction," Blomquist says.

In many cases, bank owners do a thorough inspection and restoration of foreclosed properties. But other such homes are sold "as is."

Here are a few pointers for buyers:

-- Look for a healthy discount on a vacant home offered "as is."

Rob Birkeland, a real estate broker and realty company co-owner, says homebuyers contemplating the purchase of a foreclosed home, especially one that has been empty for a month or more, can often expect a substantial discount, up to 30 percent, off the current market value.

But Birkeland, who's affiliated with the Council of Residential Specialists, cautions potential buyers of vacant homes to carefully assess the property and garner as much information as possible about its previous occupants before committing to its purchase.

Birkeland, who's sold homes since 1997, has observed many issues with vacant houses -- including major problems affecting their plumbing, heating or cooling systems. He's also witnessed malfunctioning appliances that the owners left unfixed when they moved away.

"The biggest problem is deferred maintenance," he says.

-- Attempt to learn about the previous owners of a foreclosed property.

Obviously, it can be hard to learn about a foreclosed home, because its previous owners have moved away and its institutional owners are resistant to passing on details.

"The bank will shut up, because it doesn't want to make any legal representations about the property and who lived there," says Merrill Ottwein, a real estate broker and past president of the National Association of Exclusive Buyer Agents.

Ottwein says your best sources of information are often neighbors, who usually have a wealth of information to offer about the former residents and the work they did, or failed to do, on the house in question.

-- Think through the idea of doing a "pre-inspection" of a vacant home.

If the property you like has gone unsold for a lengthy period, you're likely nervous about hidden problems. In fact, you might wish to wait to make an offer until you know more. In such cases, Ottwein advises you to consider hiring a home inspector for a preliminary look.

He tells the true story of clients who spotted a bank-owned house with excellent curb appeal, including a well-pruned yard. But the buyers wanted to know more before making a bid. They polled the neighbors, who noted that the property's previous owners repeatedly hired plumbers to resolve a mysterious problem. To probe the issue, the couple paid a few hundred dollars for a preliminary home inspection. This revealed that the sewer drain in front of the house had filled with roots and would have to be replaced -- a costly proposition.

"Knowing this, they were immensely grateful that they could walk away without buying that pig in the poke," Ottwein says.

"If you decide to go through with the purchase, the pre-inspection will let you bid based on its findings. Or you can pass on the purchase without complications," Ottwein says.

-- Make sure the utilities are on when the inspection is done.

Dorcas Helfant, a past president of the National Association of Realtors, says cost-conscious banks that own foreclosed property sometimes shut off utility service to the vacant homes they own, including gas, electric and water. But lack of utility service poses a challenge to home inspectors.

"There's no point to doing an inspection when the utilities are off because you can't determine if the cooling, heating and plumbing are working correctly," she says.

Helfant strongly recommends that buyers hire a home inspector to check out a vacant place, if not before their offer is submitted, then after. And even if you have to pay to get utility service restored, she says it's worth the expense.

-- Shape your bid for a foreclosed home in the context of the local market.

Before you make an offer on a foreclosed home, "the key is to take a careful look at the recent sales history of the surrounding neighborhood," Ottwein says.

Ask your real estate agent to examine at least three similar properties that have sold in the immediate area in the past three to six months, adjusting for differences, such as a second fireplace or a larger garage.

Clearly, you'll want to take a home's condition into account when judging its market value. But Ottwein cautions against seeking an oversized discount just because the property went through foreclosure and sat vacant for a spell.

"You have to consider the current market and find out whether there are rival bidders. If there are lots of foreclosures in your area, a nice discount is possible. But it's never an absolute certainty," he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)