Considering Housing Costs in Retirement

August 10, 2017 – There are many things to think about as you approach retirement. Chief among them is how you will spend the money you have saved. It is difficult to know how long your retirement savings will need to last, so it is important to be frugal. However, spending too little money can also be detrimental to your personal safety, health and happiness. Finding the right balance between over and under spending requires planning ahead and budgeting. One of the most important things to consider when doing so are the various costs you will have during retirement, including health care and housing.

When it comes to your housing during retirement, there is a lot of discussion of “livability.” But what does livability really mean? For a retired person, it can mean a lot of things. AARP created a livability index that scores different zip codes based on categories that included: housing (affordability and access), neighborhood (access to life, work and play), transportation (safe and convenient options), environment (clean air and water), health (prevention, access and quality), engagement (civic and social involvement) and opportunity (inclusion and possibilities). All of these things are important to consider when making retirement housing decisions, but most important of all is overall affordability.

Many people want to “age in place,” which means continuing to live in the same home until the end of life, but doing so can become extremely costly. Oftentimes, homes will have to be retrofitted and remodeled to make them easier to use. This may include a stair glide, an elevator, a walk in tub, shower seats, and widened doors. These costs can total tens of thousands of dollars. Additional costs of aging in place include home health care services, cleaning services and meal delivery. Take these costs into consideration if you plan to age in place, and determine whether it is the best option. Oftentimes, it can be easier and more cost-effective to move out of a longtime home upon retirement into something better equipped for you as you age.

There are many resources that can help you determine whether your best housing option in retirement is to age in place or move somewhere else, whether in your current area or somewhere totally new. The aforementioned AARP livability index provides helpful comparisons, as does Genworth Financial, which offers a tool that compares the average costs of home health care, adult day health care, assisted living facilities and nursing home care across states. Helpfully, it also allows calculation of future costs. Also take into account local tax laws when considering where to move—they can vary greatly and substantially impact how long your retirement savings can last. WISER’s fact sheets on long-term care are useful resources for retirement housing budgeting.

Finally, keep in mind that if you have a definitive idea of how and where you see yourself living out your retirement years, it takes planning and preparation now to make those plans a reality.

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