Again and again, research finds that most senior adults say they want to remain in their home, at least as long as possible. While there are many reasons for this, cost is a consideration. Many people believe that it will cost less for them to remain in their existing home than to move to a senior living community, such as a life plan community (also known as a continuing care retirement community, or CCRC) or other type of senior living option.
While this may prove to be true, I’ve had a number of residents living in retirement communities express to me over the years that they didn’t realize just how much they were spending while living in their previous home until they sat down to take a careful look at the numbers.
Actual expenditures can vary widely from one household to another, particularly depending on the age of the home, but there is no doubt that there are costs to staying in the home that may not be so obvious to homeowners.
Let’s take a closer look at the actual cost of homeownership…
According to a commonly held rule of thumb, home maintenance averages $1 per square foot. So, a 2,500 square foot home would require about $2,500 of annual maintenance. You could calibrate this up or down somewhat based on the age and condition of your home. You should also increase this by 30 percent for each weather factor, such as living in an area that regularly experiences freezing weather or hurricanes, or if you live in a floodplain.
As you consider maintenance costs, keep in mind that in any given year, home maintenance expenses could be much higher. An example would be replacing the roof, HVAC, or siding, any of which could cost several thousand dollars by itself.
By the time you add in things like landscaping, housekeeping, and snow removal or leaf gathering, total annual expenses for maintenance and emergency spending could easily be in the range $4,000 to $6,000 per year ($333 to $500 per month) for some people.
And keep in mind: None of the above home maintenance expenses include the cost of home modifications, if necessary.
Many homes occupied by senior adults simply are not safe or practical for aging in place, particularly if mobility becomes limited or if the homeowner requires a walker or wheelchair. Considerations include everything from accessibility to the home, floor surfaces, and lighting, to the width of doorways and height of cabinets — not to mention whether your bedroom is upstairs or downstairs.
Depending on the design of the home and the owner’s mobility limitations, the cost of modifications could be anywhere from a few thousand dollars to $100,000 or more. And if you make such modifications to your home, it’s important to consider whether the changes might negatively impact the ability to sell the home later by limiting market appeal.
Utilities and other homeownership expenses
Utilities are another considerable expense for those who opt to remain in their existing home. The monthly cost for your home’s power alone can easily go into the triple-digits in the winter and summer, especially if you live in an older home that is not well-insulated. Add to that the cost of water, phone, cable, internet, and other utilities, and the costs can add up quickly.
Homeowner’s insurance, HOA dues, and property taxes also can be quite expensive for homeowners, especially in high-tax states. And of course, for some, there may be a mortgage payment or rent.
The cost of care, the value of a CCRC
As you can see, the costs that come with remaining in your current home can add up quickly. So, while it might seem like the month-to-month cost of remaining in that home is the less expensive option as compared to the cost of a life plan community or other senior living community, that may or may not be the case when you do the math.
Consider the fact that many of these costs — like utilities, trash removal, HOA fees, snow removal and landscaping services, housekeeping services, gym memberships, and most home repair costs — may be rolled into your monthly fee at a retirement community. Other expenses, like homeowner’s insurance or property taxes, will also usually be included in the monthly service fee.
But perhaps the biggest consideration when comparing the cost of remaining in your home or moving to a CCRC or other community is the cost of care, should you ever need it. According to Genworth, the 2020 median monthly cost for homemaker or home health aide services is $4,481 and $4,576, respectively, for 44 hours per week of assistance. This would, of course, be on top of your existing costs of homeownership. In most cases, even with a paid caregiver, family members need to be involved, which could mean time away from their own careers and families.
The cost of a life plan community, which provides a continuum of care services if needed, might seem pricey at a glance, depending on the community and your contract type. Yet, when you consider what you get for your money at a life plan community, especially if you ever need care services, the cost-benefit becomes clearer for many people.
>> Related: The Cost of a CCRC vs. the Value to Residents
Crunch your numbers
At first glance, the price of retirement communities, such as CCRCs, can seem a bit steep. Yet when you take into account the costs of homeownership and the potential costs of care, you might find that the monthly price difference between remaining in your current home and moving to a life plan community is less than you thought. In fact, some people may discover that they would actually save money each month if they moved!