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The REAL Cost of Home Ownership After Retirement

Every New Year brings on thoughts of how lifestyles can be altered to improve overall well-being, resulting in the ever-popular New Year’s resolutions.  Easy to make, but hard to keep, these resolves are often health and/or finance-related…two things very heavy on the minds of those who have already reached their retirement age or those looking to retire very soon.

As mature adults contemplate their well-being and a new phase of life, financial considerations take precedence. Remaining in the current home seems the less-expensive and easiest decision for retirement, but side-by-side comparisons of the cost of living in a retirement community to the costs of living in one’s current home are indicating otherwise, especially with rental retirement living options available now that offer the option of paying for assisted and skilled care if or when you need it. It’s important to take the time to research and compare the lifestyles offered and costs involved in living in an independent living community or continuing care retirement community (CCRC). The site, www.Caring.com offers a tool titled,“Compare Your Costs: Stay in Your Home or Move to an Independent Living Community” and this cost comparison tool is also found on many senior living community websites. This worksheet enables comparisons of the current and annual costs of one’s home with what they would pay in a community. When the value of services and amenities like meals, utilities, housekeeping, transportation, safety, security, entertainment and life-long learning activities as well as the wellness options most often included in the price of an independent living community or CCRC are considered, it may be surprising to find that the total cost of Independent Living might actually be less than that of maintaining a home.  It is wise to note that we may often fail to recognize what the true cost of home and yard maintenance may be and just how much of a burden and health threat these difficult tasks can be to older adults.

Loneliness is also a significant factor in the health of older adults.  A recent study published in the Archives of Internal Medicine found that older adults who reported being lonely were more likely to suffer a decline in health or die over the six-year study period and had a 59% greater risk of suffering a decline in function–becoming less mobile or less able to care for themselves. 23% died over the course of the study compared to 14% of those who reported not being lonely. Another key finding from the study is that mature adults benefit from social engagement with others of their own generation. Socialization is still a key to healthy aging.

A Study by the Harvard School of Public Health and published in the (New York Times) found evidence that elderly people in the U.S. who have an active social life may have a slower rate of memory decline.  In fact, memory decline among the most sociable was less than half the rate of that among the least sociable. According to Lisa Berkman, Chair of the Department of Society, Human Development and Health, “We know from previous studies that people with many social ties have lower mortality rates.  We now have mounting evidence that strong social networks can help to prevent declines in memory”.

Alas, more evidence that moving to an independent living community can reduce, delay or possibly remove the need for more expensive care by offering older adults a more active lifestyle and a connection to community life that helps them to maintain their well-being and quality of life. So a better quality of life is offered and living expenses may be less than the cost of maintaining the ownership of a house and all that goes with it, but what if the mortgage is paid in full?  Sometimes people forget that even if the mortgage is paid off, there are significant costs associated with home ownership. No one really lives in a house for free and the bigger the home, the more of a drain it’ll likely be.

There are three kinds of expenses if weighing the financial pros and cons of staying in the home.

First are the actual costs of living there.  So, what are ongoing re-occurring monthly costs? There are utility bills such as electric, phone, water, sewer and trash removal, homeowner’s insurance, property taxes, food and other likely expenses such as heating fuel, cable, internet, health/wellness membership, housekeeping, yard maintenance, home maintenance, transportation fees or gas, tires, insurance, license, inspections and maintenance for car(s).

Second are costs that may be incurred in order to help one stay put such as replacing aging appliances, the roof, plumbing or a furnace.  Many mature adults have been in a home for some time. Systems and appliances may not be new and hefty sums may be necessary at one time to keep the property’s value. According to the website, www.CostHelper.com , the approximate cost is $10,000 to replace a furnace and central air conditioner system.  Lawn Care for 10 years is approximately $25,000 according to www.The-Lawn-Advisor.com.  Depending on size, shape and quality, www.CostVsValue.com says the cost of replacement windows for the average home is $11,000.  If one is a long-time homeowner and/or if the home is large, maintenance costs are sure to be a future necessity. Although, easy to dismiss as one-time expenses, they seem to roll around frequently and take a big chunk out of savings or a retirement portfolio.

Third, the intangible costs of staying.  Would services such as companion or personal care assistance be needed? According to the 2013 Genworth Cost of Care Survey, the national average for in-home health aide services for elder care is $19 an hour. Depending on how much is needed, this can add up very quickly. For some mature adults, it’s likely not a matter of money, but of time. If in good health and not in need of supportive services, think of what one can do with all the time available if someone else is managing the home for you. A rental retirement community offers the flexibility of locking the door and traveling for weeks at the time, embracing activities and trying new things.

Ok, so we’ve explored most of the obvious costs and not so obvious costs of remaining a home owner versus moving to a retirement community. Crunch the numbers yourself.  Although finances are important in making this decision, be sure to compare apples to apples and oranges to oranges and find the best value for those all-important retirement living years. Seek the help of a certified financial planner to fully explore your particular set of circumstances. Most financial professionals are in favor of reducing retirement living expenses to protect the portfolio as much as possible. Although every situation is very different, many recognize that remaining in a home may not be the most sensible financial plan for retirees, not to mention, the best lifestyle. Upon learning about Brightmore first-hand, numerous prospective residents and/or their adult children comment on the exceptional benefits and value Brightmore Independent Living offers compared to the cost and benefits of continuing to live in their current homes.  Don’t wait….Resolve to explore your retirement living options early. Come see for yourself.  Schedule a tour at Brightmore today!