Financial Considerations for Aging in Place

At some point in retirement, decisions need to be made around housing that can optimally accommodate us as we age. While retirement communities have evolved significantly and may be desirable and appropriate for some, a recent survey from Today’s Homeowner reveals that 89% of Americans over 55 wish to “age in place,” or grow old in their current homes.

The term “age in place” might conjure images of a potted plant, or perhaps jogging on the spot. A more positive picture might be one of gracefully aging in our current homes, where we can continue to enjoy the atmosphere, location, independence and privacy that we value. That said, aging in place may come at a cost.

The benefits of staying in your current home

There are a number of reasons for retirees to remain in their homes as they age. Location tends to be one of the most common reasons to age in place. Family, neighbors, doctors and houses of worship may be nearby, along with the routines built around them.

While new social opportunities may tempt some to consider a retirement community, privacy and spacious accommodations may be more important to those who prefer to stay put. Simple pleasures like keeping pets, maintaining a garden or workshop, or having large social gatherings around the holidays could be additional reasons to resist downsizing.

There are also financial benefits to staying at home. Obviously, downsizing and moving costs would be avoided, as well as the costs associated with selling the current residence. To the extent the sale of a home would trigger a taxable capital gain, that tax liability would be deferred, and if the home remained as part of an estate, the gain could potentially be avoided completely with a stepped-up cost basis.

Retirement communities may also levy entry fees and monthly fees that add up to more than the cost of simply staying where you are.

Costs associated with aging in place

While it is easy to tally up the monthly fee at an independent living community, assisted living community or all-inclusive continuing care retirement community (CCRC), it may not be as simple to understand the percentage of cash flow that a retiree will spend on aging in place.

For example, single family homes require maintenance and upkeep, which can be unpredictable. Property taxes and insurance remain as ongoing expenses. There are seasonal expenses, like landscaping and snow removal, and one-time expenses, such as the replacement of a roof or water heater.

As time goes on, there are also modifications to the home that should be considered to minimize risks. A Certified Aging in Place Specialist (CAPS) is a builder who can assess a home for aging residents. They can install grab rails, widen doorways, minimize tripping hazards and install ramps, among other things.

Don’t underestimate the need for these modifications. According to the Cleveland Clinic, more than 36 million falls are reported annually among the 65+ crowd in the United States. Many of these falls can be attributed to tripping hazards. Retirees should budget for the costs of modifying their homes and align themselves with a care manager who can arrange for assistance if it is ever needed.

Decide Where You Will Age and Take Action

Many retirees who plan to age in place may really be expressing a desire to avoid what they see as the alternative—going to a nursing home. However, today’s retirement communities are much more than mere nursing homes, with many offering attractive features and amenities.

That said, if the desire is to remain independent and in the current home, it’s important to develop a plan to manage home-related expenses, potential home modifications and costs associated with future care within the home. Responding to a crisis, such as a fall, can be considerably more expensive than planning ahead to reduce this risk. This advance planning can also help a retiree avoid becoming a financial or physical burden on someone else.

The American poet Maya Angelou said, “The ache for home lives in all of us.” In summary, remaining independent in our current homes is the preference of most aging Americans. If aging in place is your preference, our advice is to weigh the costs carefully and work with your Corient Wealth Advisor now to come up with a financial plan that will enable you to maintain the independence, privacy and space that you desire.

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James Ciprich, CFP®, MBA

James Ciprich, CFP®, MBA

Partner, Wealth Advisor

Jim is a Partner, Wealth Advisor and Investments Leader in our Morristown, NJ, office. Serving a broad range of clients, he has a particular focus on retirees considering care and housing options. Jim founded legacy firm RegentAtlantic’s Senior Solutions practice specialty. He is often asked to speak at retirement communities and client events and is frequently quoted in the media. Jim also serves on an advisory council to the MIT AgeLab. He holds the CERTIFIED FINANCIAL PLANNER™ certification and has an MBA and a BA in Economics from Rutgers University. He served as an adjunct professor at Fairleigh Dickinson University in the CFP® program. Jim is a past president of his local estate planning council, and he has also served as a trustee for Morristown United Methodist Church. In recent summers, he has volunteered with Appalachia Service Project. In a prior career, Jim worked in the music industry, where he was awarded multiple RIAA-certified gold and platinum albums.


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