From Shared Values To Shared Quarters

thorny tax issues. “Once you hit 70 ½, you’re really out of the sweet spot of tax planning, because you’re forced to take distributions and Social Security,” says Bob Morrison, a financial planner at Downing Street Wealth Management near Denver. Receiving too much money at once can knock you into a higher income tax bracket or deprive you of deductions. “Once your income exceeds $250,000, the IRS phases out your personal exemptions—$4,000 per individual—and then at about $300,000 your itemized deductions start phasing out,” he says. Those could include deductions for medical expenses and mortgage payments.

For this reason, Morrison recommends that clients start converting a portion of their traditional IRAs into Roth IRAs before age 70. Roth IRAs not only offer tax-free withdrawals but also have no RMDs. The IRS even lets you add money to a Roth account as long as you’re still working past 70. Roth conversions are taxable events themselves, but one could convert just enough each year prior to reaching 70 to keep from being bumped into a higher bracket. Even this strategy has wrinkles, depending on where you live and where you plan to retire. “If you live in New York City and have a high income, you’re probably paying very high state and local income taxes,” says Matthew Kenigsberg, vice president for financial solutions at Fidelity Strategic Advisers. “But Florida has no income tax. So if you’re planning to retire there, it would make sense to wait till you’re in Florida to convert to a Roth to avoid paying those local New York taxes on the conversion.” On the flip side, someone living in a no-incometax state like New Hampshire who plans to retire in a high-tax one such as California should convert to a Roth early to avoid the future taxation.

Perhaps the biggest decision many boomers will face upon reaching 70 is whether to retire. Steven Podnos, a financial planner with Wealth Care in Cocoa Beach, Fla., often counsels clients to keep working at least part time for psychological reasons, “because they have some anxiety over living off a pool of money,” he says. “We see that a lot.”

For the most diligent savers the psychological trauma of spending down assets may be the greatest challenge. “They’ve worked so hard to build their portfolio, they’re hesitant to take anything from it,” says financial planner Bronwyn Shone of BlueSky Wealth Advisors in Pleasanton, Calif. “In one case, I had to give clients permission to buy tennis rackets and hiking boots. ‘Please go buy them,’ I said. ‘You can definitely afford it.’” The bottom line Baby boomers start turning 70 this year—and they have to begin withdrawing from retirement accounts or face penalties. Scandinavian-style co-housing is gaining traction among boomers

“People who live in a community live healthier and happier”

The rhythms of EcoVillage Ithaca echo those of any small upstate New York town. On a recent weekday morning, three home-schooled boys whiz by on bikes. A woman adds topsoil to raised beds of spinach and kale, rejoicing that the plants survived the winter.

But this isn’t just another sprawling residential development. EcoVillage is a planned co-housing community whose 240 residents share kitchens, car rides, and a commitment to sustainable living. Born in Denmark in the 1970s, the co-housing concept has been gaining ground in the U.S., where more than 150 such communities exist, according to the Cohousing Association of the United States. While most are intergenerational like EcoVillage, senior-only co-housing developments are growing in popularity, with 10 completed in recent years and 14 in progress. “One part of the appeal is co-housing communities are mostly, if not entirely, run and organized by residents,” says Stockton Williams, executive director of the Terwilliger Center for Housing at the Urban Land Institute in Washington, D.C. “It’s an approach to creating a more tightly knit sense of community among people with similar values, which seems to be an aspiration that many baby boomers have.”

Quimper Village will be a 55-andup co-housing community in Port Townsend, Wash., when it’s completed in 2017. The 28 single-family condos will range from $277,000 to $425,000. “People who live in a community live healthier and happier and have more fun,” says Pat Hundhausen, 75, who co-founded the community with her husband, David. “We wanted to be more proactive about aging and not get caught up in some corporate or medical model,” she adds.

Andrew Carle, an adjunct professor and expert on senior housing at George Mason University, says that despite its many attractions, co-housing isn’t always an ideal choice for seniors, many of whom “are in denial” about the kind of care they’ll need as they age. “They believe they can live in co-housing and help meet each other’s needs,” he says. “The reality is they will in most cases reach a point where that will not be practicable or achievable.”

EcoVillage consists of three dense neighborhoods, each with its own 5,000-square-foot common house for meals and gatherings. The first, named Frog , was completed in 1997, and the most recent, Tree, was finished last November at a cost of about $9.4 million. The first two neighborhoods each have 30 townhouses, while the latest is a mix of 40 single-family homes, apartments, and townhouses, a third of which are occupied by retirees.

The 175-acre campus includes three organic farms. Solar panels gleam from rooftops and are mounted on the ground, and a reuse room enables residents to recycle clothes, toys, and books. Some villagers use a ride-sharing app to coordinate car trips. After downsizing from a 5,000-square-foot New Jersey house to a one-bedroom, $187,000 co-op apartment in EcoVillage last year, Arlene Muzyka says she and her husband have reduced their driving by 65 percent and their utility usage by 75 percent.

The cooperative nature of