Assisted living facilities are running short on rooms, but most boomers want to age in place. A recent Georgetown University study found that 91 percent want to stay in their homes, and that 96 percent want to be “as independent as possible” as they grow older.
With so many healthy 50- and 60-somethings, it’s easy to see why retiring clients would want to keep their homes. They’ve spent decades establishing themselves in their communities, and without serious health concerns, the burden of a move may outweigh the convenience of assisted living.
There are plenty of bottom-line benefits to aging in place, as well. Most retirees have paid off their mortgages; it may be cheaper to age in place than pay thousands of dollars per month for an apartment in a retirement community – far cheaper, in some cases.
Still, aging in place is not without its costs – nor is it feasible for every retiree. Between home maintenance, property taxes and the potential need for long-term care, even a paid-off home can be expensive and tough to manage. Moving later in retirement is also far from ideal, and clients need to plan for the long haul – not just the healthy years.
A room in an assisted living facility costs, on average, over $3,600 per month, which can increase dramatically in higher-end communities and more expensive states. Still, that figure may include meals, maintenance, utilities and other living costs, and it can become expensive to cover those necessities in your own home.
HOA fees and property taxes can also chip away at a nest egg. Some retirees still have mortgages to pay. Many people may also have to renovate later in retirement in order to maintain a livable home. Even a simple stair lift can cost several thousand dollars; major remodels can be five-figure affairs.
For many retirees, however, in-home care may be the greatest potential cost. Homemaker services and home health aides each average $3,813 per month – even more than some assisted living facilities. While many clients won’t need around-the-clock – or even daily – care, the combined costs of even part-time care and home ownership can become too much for older retirees to bear.
Still, those costs may not deter your clients from their desire to age in place.
“My experience is that, unless it’s beyond their means to afford, [retirees would] still prefer to renovate and have caregivers come to their homes,” says Ken Moraif, senior advisor at Money Matters. “Familiarity overrides price.”
In these cases, it’s important to make sure clients at least understand the potential costs so they can adjust their budgets and drawdown strategies accordingly.
Taxes and assets