Skip to main content


Financial Planning for Aging in Place: It Costs More Than You Think

Financial Planning for Aging in Place: It Costs More Than You Think

It’s probably no surprise to hear that most senior citizens in America would prefer to live out their days at home. According to an AARP Research Center study1, 87 percent of adults 65 or older want to stay in their current home as they age.

Unfortunately, many times circumstances don’t align so that aging in place is a feasible, or affordable, option.

Factors that Make Aging in Place so Costly

It can be hard to imagine living at home would ever become more costly than an assisted living facility. In the beginning years of retirement, care needs are often light and are typically able to be taken care of by spouses or family members – thus making aging at home seem like the sensible option.

But not everything always goes according to plan. Some seniors don’t have family close by, or maybe their family cannot take on the extra responsibility. There’s also the possibility that a spouse will pass away while caring for another, or both spouses will be in need of extra care.

When this is the case, a professional caregiver is needed – the national median cost of which is about $4,000 a month2 for about 6 hours of help a day. This is in addition to potential home renovation costs to make your current home livable in your later years, medical expenses, and general living expenses.

Understand Medicare and Medicaid

Once you hit 65, you may be able to get some of your long-term care expenses covered by Medicare or Medicaid – but there are some key differences to be aware of.

Medicare will cover a few costs of long-term care, but they must fall under very specific requirements. General custodial care, aka support for your day to day personal care needs, is not covered by Medicare. What it will help with is some of the costs of long-term care in a hospital, skilled nursing care at a skilled nursing facility, and some home health-care services. Overall, one should not rely too much on Medicare to cover their home health care needs

Medicaid on the other hand, covers a much wider range of long-term care services, but one must first meet the income and asset requirements. For most states, the asset requirement is $2,000 for singles and $3,000 for married couples that live together. This has prompted many retirees to try and spend down their assets so that they will qualify for Medicaid, but one should note that the government looks at finances going back five years to gauge if you really meet the requirements.

Deciding How to Pay for the Costs

Just because the prospect of aging in your own home may be more expensive than you think, it doesn’t mean there are other options out there that are very much better. No matter what living scenario you decide on in your old age, you’ll need to save in advance.

So where should the money come from? Oftentimes, it’s a mix of retirement savings, Medicare/Medicaid, and possibly long term care insurance with home care coverage.

Not sure if long term care insurance is the right choice for you? Think about your individual financial situation. If you have little income and assets, you may end up relying on Medicaid in your later years. Or maybe you already have a nice pension and a hefty amount in savings, making you feel more prepared to self-insure (pay out of pocket). But if you’re in between these two, long term care coverage could be worth considering. As with most insurance policies, there are different amounts of coverage you can choose, and you may not necessarily need the most expensive policy.

Another option is downsizing to a smaller, and hopefully less expensive, home. While this doesn’t necessarily satisfy the desire to stay in the same home, it may provide the extra money needed to make home-care an option.

Take the time to meet with your financial advisor about creating your aging in place plan. With all the potential problems that can arise from long-term home care, starting to create a plan early can make a world of difference.


Why Your Kid Could Use a Roth IRA
Joseph Walsh, Jr. Recognized as One of LPL Financi...