Financial Considerations Of ‘Aging In Place’

One of the most critical decisions retirees will make is whether to stay in their homes or move to a retirement community. While most would overwhelmingly choose "age in place" rather than move, it’s not always the best financial choice, said Eleanor Blayney, the CFP Board’s consumer advocate.

Financial costs must play a role in the decision, she said, because an estimated 70 percent of people over age 65 will eventually need some form of caretaking services.
The decision "requires taking a realistic and non-sentimental view of the potential costs that may be incurred in retirement," Blayney said.

Some retirees have no choice but to remain in their homes because the "costs of a dedicated retirement community may be out of reach,” she said. “Others simply resist change.”

Blayney suggests the following options for retirees who remain in their homes as ways to help pay for caretaking services, should they need them:

• Long-term care insurance or annuities with a LTC rider are options for retirees. Most LTC policies provide coverage for in-home caretaking services. However, very few people purchase these policies. According to Blayney, this may be partly due to the fact that if LTC services are not needed during the policy holders lifetime, all the premiums have been paid for nothing. Annuities with a LTC rider are another option, but these policies are considerably more expensive that straight LTC insurance, she said.

• Reverse mortgages are also a financing option. Blayney suggests retirees could use the loan proceeds to pay for LTC services. But they should be mindful of the terms of the contract, such as possible loss of the home, if the stipulations of the mortgage agreement are not met. 


• Medicaid is an option that few retirees like to think about, said Blayney. Medicaid does provide for caretaking services in the home, but only for those who have exhausted most of their net worth.

Retirees should seek advice from a financial professional to weigh their options and make the best decision possible given their circumstances, Blayney suggests.