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Don't let retirement catch you off guard

Retirement is, in many ways, a double-edged sword;  freedom must be balanced against preparation, especially when it comes to choosing where you'll live. Jean Chatzky shares four tips to help you choose your post-retirement home.
/ Source: TODAY contributor

Retirement is, in many ways, a double-edged sword. On the one hand, it's exciting to think about the next chapter. It’s a time we'll finally have the ability to pursue long-dormant passions, whether that means starting a new business, traveling or simply spending time with family. On the other hand, it takes a lot of preparation, particularly when it comes to figuring out where, and how, you're going to live.

That's as much a financial question as it is an emotional one. “Your money has to stretch, which is what many people are concerned about. But what they aren't concerned enough about is asking, ‘Where am I going to be that is going to stretch my money the furthest, but also give me a lifestyle that I'm going to fall in love with?’ ” explains Barbara Corcoran, real estate guru and author of the new book “Nextville: Amazing Places to Live the Rest of Your Life.”

That's why this week we're focusing on how to weigh your options while still keeping an eye on your wallet.

Do a little soul-searchingHow do you know whether your version of paradise is a tropical island or a small, sleepy town? You need to take a step back and really think about what's going to be a priority for you during those years. Sure, a bungalow on the Atlantic sounds great, but once you get there, are you going to miss your family? Are there opportunities to volunteer or take classes nearby?

“We spend probably about 40 percent of our waking hours in the pre-retirement phase of our lives working, so you're going to have a lot of time on your hands,” says Craig Venezia, author of “Buying a Second Home: Income, Getaway or Retirement.”

“Think about how you want to fill those hours, and then make sure the location you're considering complements your interests. It makes sense to plan a few vacations in the area, so you can get a lay of the land and the people who live there, and make sure it's a place where you feel comfortable growing old.”
Plan for the long haul
You may be spry now; I know plenty of people in their 60s who still run daily, but don't forget that you're looking for a home, and a location, where you can age. Sounds a bit depressing, but it doesn't pay to put this out of mind. Venezia says to think about things like whether you'll really want a multilevel house when you're in your 80s, or if the doorways are wide enough to accommodate a wheelchair, should you eventually need one. “I'd say the biggest mistake people make is thinking abut how they are right now instead of how they are going to be 10, 15 or 20 years from now. Will the area and house support you as you age? The last thing you want to do is have to move at 70.”

Other things to consider are whether or not there's a good hospital nearby (a must) and if a public transportation system is available to step in during the later years when you may not be able to drive.
Take advantage of the current market
“Right now we have a real estate miracle happening. We not only have low prices, but we have cheap money and low interest rates at the same time. In the 40 years I've been doing this, I've never seen those two things happen at once,” says Corcoran.

It's a good time to buy, that's for sure, but one caveat: You only want to buy now for later if you're absolutely, positively sure that you know what you want, and you're within about 10 years of your retirement date. Not only could your needs and circumstances change drastically, but the area where you purchase could, too. Given time, the small, quiet town you fell in love with could easily become a suburb full of strip malls. Make your money lastLife expectancies are going up, and that means your retirement could stretch for 20 or 30 years. It puts the pressure on you to really buy something you can afford, in an area where the cost of living isn't sky high. It'll help if you can spread the savings you've accumulated evenly over time, something that isn't discussed nearly as much as the saving process itself. A general rule of thumb is to withdraw no more than 4 percent of your savings each year. That means when your investments do well, you can live a little richer, but if they've fallen, you have to cut back. This should get you safely through.

With reporting by Arielle McGowen.

Jean Chatzky is an editor-at-large at Money Magazine and serves as AOL’s official Money Coach. She is the personal finance editor for NBC’s TODAY Show and is also a columnist for Life Magazine. She is the author of four books, including 2004’s “Pay it Down! From Debt to Wealth on $10 a Day” (Portfolio). To find out more, visit her Web site, .