I interviewed a reader of this column last week. She expressed concern about an 81-year-old senior who had lost his home due to a financial obligation. He now faces an uncertain future as he ponders a future of homelessness. How long will he depend on the compassion of loved ones for shelter?

Losing his home at this stage of life can be devastating. He can’t obtain a mortgage and he is running out of time and money. The reader wanted to know what can be done to prevent the elderly from losing their homes in retirement. It is a thought-provoking question. Whose responsibility is it to guarantee housing security for the elderly, or should it rest solely with the individual?

Planning for retirement should start early and involves examining all possible scenarios that can occur before and after retirement. Safeguarding the residential home is a priority. It’s best to pay off mortgages before the work life ends. If the mortgage extend into retirement the payments should be manageable.

However, there are retirees whose mortgages were paid off before retirement but have since used the equity in their homes for home expansion, renovation, or for major expenses such as health care, or even expensive vacations or leisure activities. Equity loans can prove costly, and retirees run the risk of losing their homes. Managing financial resources in retirement is even more crucial than ever, because there is no room for costly mistakes or errors when monthly salaries are non-existent or if pension income is low or has lost value to inflation.

I recently met with an employee who is retiring this year. If he opts for a monthly pension it will be one-fifth of his previous monthly salary. He has decided to take the one-off lump sum option and invest it, and will return to work for at least another few years as he seeks to manage his monthly expenses and financial responsibilities. This will require strict discipline on his part, but he has decided that this is the best opportunity for him to grow his resources and not run out of money in retirement. His mortgage is paid off, and he plans to be debt-free in retirement.

Here’s a review I conducted with a retired client revealed that his mortgage is paid off. He has an emergency fund, and his life savings were invested. Additionally, his monthly pension is sufficient to cover his living expenses, and any extra income is saved. He has not used any of his investment since retiring. His investments will provide income for the future. When asked whether he had taken a pension lump sum upon retirement, he gave an insightful response. He weighed all payout options and decided against the 25 per cent tax-free lump sum since it would result in a reduced monthly pension. He theorised that the reduced pension option would lose value faster in retirement, but the normal monthly pension would provide the opportunity for him to save portions of his pension in a long-term investment plan. His plan of action has been very successful.

At the end of the interview I praised him for his foresight, wisdom, and discipline in managing his financial affairs. He expressed satisfaction with his retirement lifestyle and the fact that he is in a financially stable position to meet any unforeseen major expenses that may arise. The ability to plan for the unexpected, even the likelihood of living long in retirement, gives peace of mind that cannot be quantified. Still, it has immense value. Being debt-free is a priority for him.

Reviewing your financial plan is important in retirement. The services of a competent financial advisor can be of great value. The future is unpredictable. A major lawsuit can wipe out a retiree’s homeownership. Divorce is another reason for retirees losing their homes in retirement. Major medical expenses and long-term health care may result in retirees selling their homes and living in long-term health-care facilities, which are very costly. The death of a spouse can also lead to the residential home being sold as loved ones struggle to cope with the memories, or they are challenged by the additional responsibility to deal with the maintenance and other ongoing home-related expenses.

Some retirees may choose to live with other family members or opt to downsize their homes by selling their residential homes and purchasing smaller properties. Home maintenance can also prove costly. Retirees who didn’t plan for home repairs and maintenance can become very unhappy or distressed when living in a dilapidated home with leaking or damaged roofs or rodent infestation. Home insecurity can occur in situations where the home has become hazardous to live. Because of the aging process it’s necessary to have homes that have the necessary facilities to accommodate the challenges that come with aging.

Retirees who live in upstairs buildings, with staircases as their only access will impede their mobility as they age. One homeowner shared with me that a lot of thought went into building her family home. Though all the bedrooms were upstairs, her husband insisted that a master bedroom be built downstairs, which would be used when they were too old to use the stairs. This was forward-thinking. Though the view upstairs was terrific, in old age comfort and convenience will be more important than the upstairs view.

Financial instability can result in home insecurity. Therefore, authorities have a role to play in data research and policymaking that can aid the elderly who may be at risk of home insecurity or homelessness.

Grace G McLean is a financial advisor and retirement specialist at BPM Financial Limited. Contact her at gmclean@bpmfinancial or visit the website: www.bpmfinancial.com. She is also a podcaster for Living Above Self. E-mail her at livingaboveself@gmail.com.

Grace Mclean.