Q. A while back you did a series of columns about unusual retirements, including living on a sailboat. My husband and I are avid sailors and have enjoyed Florida cruising vacations for many years. We would like to do more extended cruising. I am 54 and a teacher with Florida state retirement. My husband is 54 in civil service and will be eligible for minimal retirement in a year. Both of us would have our pensions reduced because of our age.

We have a waterfront home worth over $800,000 which we are thinking of selling. We would use the $600,000 equity to pay off all debts, including our 40 foot sailboat, and purchase a townhouse in a planned community for cash. This would keep us in the market.

Would we be better off not paying cash for the townhouse and investing the money instead? Any other suggestions?

---R.B., by e-mail from Florida


A. If you haven't already, get a copy of Charlie Wing's "The Liveaboard Report" (McGraw Hill, $16). It is based on a survey of live-aboard sailboat owners and includes four different budget levels of expense. It will help you with some of the boat-based decisions.

I suggest that you avoid buying a replacement house and invest the equity from your home. There are several reasons for this. You may be able to pay cash, but the townhouse will still have operating expenses. If you buy a $200,000 townhouse, it is likely to have expenses of $10,000 to $12,000 a year. This expense would absorb the income return from another $250,000 or more. In addition, the townhouse will have to appreciate by 5 or 6 percent a year just to "stay even" with its operating expenses.

Yes, I know 5 or 6 percent a year seems a sure thing given Florida real estate appreciation in the last 5 years but there is no guarantee that super appreciation will continue.

Another reason to forgo ownership is to liberate yourself from your current habits about housing. You may discover (1) that you like living aboard as a permanent lifestyle, (2) that your housing needs are much different after living on a boat, or (3) that where you want to live has changed dramatically. So why go through all the hassle of buying and selling a house?

Many readers responded to the Living Lite series, which can be found on my website (www.scottburns.com) in the "readers" section. I don't think I came close to doing justice to the stories I heard. What I learned, however, convinced me that we have a lot more choices than we exercise. It also convinced me that the biggest lever on our well-being--- financial and personal--- is our personal decisions, not our investment decisions.


Q. My sister, 78, is moving to Dallas from St. Louis. She has been a widow for 30 years, has no children, and owns her home free and clear (worth about $120,000). She has no debt, still drives, and has inherited investments worth about $275,000.

She is relatively healthy but had a slight stroke 12 years ago, has had a hip replacement, and has had cataract surgery.  

Should she buy a house or live in a retirement community? She can't live with me or my grown kids.

---K.P., Dallas, TX


A. Start researching continuing care communities and use your knowledge of Dallas to help your sister make a decision. Continuing Care Communities are the retirement communities that offer a continuum of independent living, assisted living, and skilled nursing in the same complex. An upfront fee that may, or may not, be refundable guarantees lifetime care.

There are many reasons to make this choice. The most important is that your sister is a prime candidate for a continuing care community. She is a widow. She has no children who can provide care. And she is fast approaching the age when the security of a CCC will be very appealing. She's also young enough that she can establish a broad network of support in her new community because she'll enter it as a healthy person who is still driving a car.

Will she ever need assisted living or skilled nursing care?

Maybe. Maybe not. But she is a prime candidate. Men generally avoid both the hard way, by dying.