4 Min. Read

Can You Afford to Age in Place?

A woman calculating whether she can afford to age in place

Many retirees like the idea of staying in their homes as long as possible. Staying in a familiar place where you can stick to your routines can be comforting. However, the reality of staying in your home might not quite match up to the fantasy. As time passes, additional costs and concerns can crop up. Here’s what you need to know if you’re trying to decide if you can afford to age in place

How to Evaluate if You Can Afford to Age in Place 

First, according to Lauren Mendoza, a CPA and the founder of Bank Standard, it is important to evaluate the condition of your home.  

Mendoza suggests determining whether you need to make upgrades now and thinking of the potential for future modifications. As you age in place, she suggests adding ramps or rails or making other costly upgrades. 

Keith Sant, a real estate professional and founder of Kind House Buyers, suggests considering other home-related issues as you determine whether you can afford to age in place: 

  • Home maintenance. “This could include anything from painting and minor repairs to major improvements like roof, window, or siding replacements,” Sant says. “It is important to keep up with regular maintenance needs in order to prevent larger, more costly issues down the line.”
  • Utilities. “Utility bills can add up quickly as you age in place,” Sant points out. “From increasing heating and cooling costs to rising water and electricity bills, it is important to be mindful of how much you are spending on utilities each month.”
  • Property taxes. “Depending on where you live, property taxes can take a significant chunk out of your budget when aging in place,” Sant says. “Make sure to stay informed about local tax rates and exemptions that may be available.” 

Mendoza also suggests looking into local home healthcare services and their costs. Medicare might not cover long-term care; find out how it works and what it will pay for as you plan to age in place. Most costs will increase in the future, so consider planning for inflation, especially in terms of healthcare. 

“Create a detailed budget factoring in all these costs, and then consider how your retirement income, savings, and potentially a reverse mortgage can cover these expenses,” Mendoza says. 

When to Consider Transitioning Out of Your Home 

While you might try to age in place as long as possible, the reality is you’ll likely need to make other arrangements.  

According to Wayne Bechtol, a certified financial professional and senior tax accountant at the financial company Fiona, moving into a retirement community might make sense if expenses become too much. 

“These facilities often have what you need to care for your health,” Bechtol says. “The fixed payments that cover all your living costs and some of your care can make your budget more predictable.” 

In addition to combining various financial obligations into fewer payments, transitioning elsewhere can also help you in the following ways: 

  • Less worry about home upkeep. As you age, you won’t have to worry about your ability to manage your maintenance and repairs. You will not have to deal with the cost of hiring service providers to handle the maintenance and yard work.
  • Social benefits. You might feel social isolation if you no longer have a partner, spouse, or some other companion. A retirement community can provide you with activities and interaction and help you get to and from outside events. 
  • Cooking and cleaning. These facilities provide access to cooking and cleaning services, which can be billed as part of the package. You might even have access to dining. This can reduce the amount of work you need to do to take care of yourself. 

“Feeling isolated can take a toll on your mental and physical health,” Sant points out. “If you find that aging in place leads to feelings of loneliness or isolation, then transitioning to another living situation might be the best option.” 

Plan for the Possibility of Change

While aging in place might be the preference, it’s not always the right move. You can plan for aging in place by saving and considering other accounts, such as a Health Savings Account. However, Mendoza says that it’s a good idea to plan for the possibility of transitioning to another living arrangement. 

“Transitioning from aging in place typically happens when the costs or demands become too overwhelming,” she says. “Factors include escalating health care needs that require professional medical assistance, the home’s inability to be adapted for changing physical needs, the financial burden of maintaining the property, or social isolation.”  

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