Aging in place has physical, emotional, and financial health benefits but takes some planning. Here's what to consider before aging in place.
If you’re retired or recently turned 62, you might be considering whether you’ll stay in your home during retirement. If that hasn’t crossed your mind yet, it’s a good time to start thinking about it.
About 90% of older Americans surveyed say they want to live in their own homes for as long as they can, according to an American Association of Retired Persons (AARP) report.
Known as aging in place, remaining in your home is attractive for many reasons. You can continue to enjoy your home, your community, and the amenities to which you’ve grown accustomed without feeling as though you’re starting over.
However, your home may need certain modifications or renovations to make aging in place viable. And planning for those while you have time and good health on your side can make all the difference in having the retirement you envisioned.
People usually start thinking about how they’ll age in place during their mid to late 50s, said Steve Cunningham, chairman of the National Association of Home Builders and president of Cunningham Contracting in Williamsburg, Va.
There are a number of considerations when thinking about how you’ll use your home in retirement and whether it’s equipped to see you through the next few decades. Your needs may change substantially during that time, and planning for renovations early can help you save up and spread out the cost over several years.
“Ideally, modifications should be made before they need to be made,” Cunningham said.
You don’t want your house to be a construction site while you recover from a knee replacement surgery, or for your home to be unsafe if you find that you need grab bars in the bathroom.
Making these changes in the years before they’re necessary can improve your quality of life and create minimal disruption as you transition to different circumstances.
There are many benefits to aging in place:
Aging in place versus moving into a long-term care facility is also associated with better physical and emotional health outcomes, according to the U.S. Department of Housing and Urban Development (HUD).
Remaining in your home can be significantly more cost-effective than eventually moving into a nursing home as well. HUD reported that nursing home care expenses were three times higher than the cost of non-institutional, or at-home, long-term care.
According to one senior home care company’s estimate, a shared room in a nursing home or assisted living facility can cost $10,000 to $20,000 per year. A private room may cost as much as $75,000 annually.
Aging in place versus moving into a long-term care facility is also associated with better physical and emotional health outcomes.
U.S. Department of Housing and Urban Development (HUD)
For some people, moving into an assisted living facility is the right choice, whether because of a health condition or a preference not to have to manage the maintenance of their home after a certain age.
Others may wish to age in place — just not in their current homes, for a variety of reasons, including:
A desire to be closer to loved ones in retirement may make selling your current home and moving into a new one the right choice.
“If you live in a rural area, and have to spend a couple weeks in rehab and no one can come and see you, that can be difficult and create complications,” said Louis Tenenbaum, founder and president of Homes Renewed Coalition, an advocacy organization in Washington, D.C., that supports aging in place initiatives.
Not having informal help, such as family caregivers or friends that live near enough to help on a daily basis, may be a deal breaker for some seniors when deciding whether to remain in their current homes.
Early in retirement, you might have few to no health issues or mobility challenges. But as you age, you may find you need to visit your doctor more often, or you may need to see specialists for certain treatments or procedures.
Take stock of the medical care options where you are. How long do you have to drive to see your doctor? Where is the nearest hospital? Are there specialists nearby?
Beyond doctors, look at home care provider services. You may at some point need a nurse or caregiver to come in a few hours per day to help out around the house and with daily personal care, and you want to know those resources are available where you are.
“If you live in a rural area, and have to spend a couple weeks in rehab and no one can come and see you, that can be difficult and create complications."
Louis Tenenbaum, founder and president of Homes Renewed Coalition
Consider, too, how easy or difficult it may be to access other resources. How far away is the church or community center you attend? Do they offer transportation services if you’re no longer able to drive? What types of entertainment and hobbies are available in the area to keep you socially engaged and fulfilled?
If you’re still working, you may not have much time to focus on hobbies and social events. But once you retire, these may become essential to enjoying your home and community.
Related reading: Your Guide to Buying a Home in Retirement
Should you decide that your current home is the optimal environment to age in place, great! That can be a smart financial decision and support a high quality of life in retirement — as long as you make the appropriate preparations for the house.
Ask yourself the following questions as you create your plan to stay in the home?
You want to envision your needs for the next 10, 20, or more years in the home. Perhaps you’re still comfortable mowing your lawn and managing basic repairs yourself now. But will you eventually need to hire someone to do those tasks?
Thinking about these details can help you create a realistic framework and budget for aging in place. It’s important to consider whether you live in an area where you can easily find companies and workers that provide such services.
The answer to this question depends on your property. A ranch or other single-story home may need fewer adjustments than a multi-story property with steep stairs. Additionally, a house with steps leading to the front or back door may need a ramp installed eventually, whereas one with a simple pathway leading to the entrance may be fine as is.
Whatever your needs, there’s likely a solution.
“Any property can be fitted to help someone age in their home. It all depends on budget,” Cunningham said.
Before we dive into a list of potential renovations, keep this in mind:
“Completing renovations that mitigate the dangers of trips and falls are key and can provide comfort for years to come,” said Joe Pessolano, branch sales manager at Fairway Independent Mortgage Corporation (Fairway owns Home.com).
Remember, you don’t have to make all of these changes at once — and not all of them will apply to your situation. The key is to think through the everyday activities that may become more difficult in the home.
“Any property can be fitted to help someone age in their home. It all depends on budget.”
Steve Cunningham, chairman of the National Association of Home Builders
And if you’re not sure where to begin, you can consult an expert. Cunningham said that about 90% of his clients need bathroom and front entrance modifications. But a Certified Aging in Place Specialist (CAPS) contractor can help you determine which renovations you need and how to use them to enhance your present and future experience of the home.
CAPS is a national certification for aging in place building and remodeling contractors.
The program teaches contractors about safety bars, transitional height placements from room to room, adapted door handles, senior-appropriate light switches and plumbing fixtures, and cabinetry for the handicapped versus aging in place.
It also teaches them how to make these renovations aesthetically pleasing. Cunningham said CAPS consultants can help you build a design that “…makes those jobs look like they came out of a magazine.”
Here’s the good news about renovating your home to age in place: you may be able to use the property itself to finance the modifications.
Home values have risen significantly since 2020, creating more home equity options.
“With the housing market seeing significant growth in equity, now is a great time to use some of that equity for these renovations,” Pessolano said.
You may be able to take out a home equity loan, home equity line of credit (HELOC), or a cash-out refinance to cover renovation costs.
But if you’re 62 or older, you may be better served by a reverse mortgage loan. A reverse mortgage allows you to borrow against your home and receive funds as a lump sum payment, monthly installments, a line of credit, or a combination of installments and a line of credit.
The balance of a reverse mortgage does not come due until the last borrower, or designated non-borrowing spouse, leaves the home, as long as they maintain the property and continue paying property taxes and homeowners insurance.
The most common type of reverse mortgage is a home equity conversion mortgage (HECM), which is backed by the Federal Housing Administration (FHA).
Learn more: Why a Reverse Mortgage Loan Should Be in Your Retirement Plan
Harlan Accola, National Reverse Mortgage Director at Fairway Independent Mortgage Corporation and author of “Home Equity and Reverse Mortgages: The Cinderella of the Baby Boom Retirement,” said many seniors probably have the wealth they need for aging in place, but they don’t realize it.
“There are so many people who think they can’t use the wealth in their house, so they sell it to create liquidity and move somewhere else, and they’re unhappy. It’s the single biggest missed opportunity,” Accola said.
The advantage of using a reverse mortgage to finance home renovations lies in the repayment structure. As long as you stay current on the property taxes, insurance, and maintenance, you will not have to repay the funds until you move out of the home, at which point you can sell the home to pay off the loan. If you pass away, your heirs will have the option to sell the home and repay the loan, or refinance to a forward mortgage in their names.
With a home equity loan, HELOC, or cash-out refinance, you would be obligated to make monthly payments, which may become more difficult when you stop working and are on a fixed income.
Learn more: Reverse Mortgage Loan vs Home Equity Loan: Which One Suits You?
Using a reverse mortgage can also help you extend your retirement and investment savings,* since you wouldn’t be withdrawing earnings to cover renovation costs — leaving that money available for day-to-day living expenses, travel, medical costs, and other priorities.
Homeowners who qualify for a reverse mortgage can use the funds they receive any way they choose, including to install smart technologies, modify their homes, or pay for home caregiving services. The money can also be used toward paying for Life Alert, health and wellness apps, and monitoring devices to track different health metrics.
“There are so many people who think they can’t use the wealth in their house, so they sell it to create liquidity and move somewhere else, and they’re unhappy. It’s the single biggest missed opportunity,”
Harlan Accola, National Reverse Mortgage Director at Fairway
Reverse mortgages typically do have higher closing costs – about 2% of the home value – but that cost can come out of the equity or be paid upfront.
Importantly, Accola said that if the home’s value is lower than what you owe at the time you leave the home or pass away, you and your heirs will not owe more than the appraised value.**
The remaining amount on the loan is covered by the FHA mortgage insurance premium on the home.
In other words, your kids won’t be stuck with the bill for an upside-down house.
If you decide that downsizing or relocating to a home in a different area is the right choice for your retirement, you can also use a reverse mortgage to buy a home.
Aging in place refers to staying in your home as you get older, rather than moving into a nursing home or assisted living facility. For many older adults, aging in place can help them save money on housing and medical care costs, and they often have better health outcomes when they stay in their homes and communities.
Yes, it is. However, you may need to modify your home to accommodate your needs as you get older. Older people who age in place might need to install ramps, widen doorways, or install walk-in showers for home safety and accessibility over time. There are specialists who can consult on what your home may need and how to make those changes based on your budget.
Older adults who remain in their homes rather than entering a nursing facility often have better health and financial outcomes. Remaining in one’s home can sustain a senior citizen’s quality of life, as they may be comfortable where they are and feel connected to their neighborhood and community.
Even if you’re in great health, and you’re active with no mobility issues, it’s worth thinking about your future needs.
“We humans have a lot of trouble looking into the future…we tend to look at the future through rose colored glasses” and expect that the worst won’t happen to us, Tanenbaum said.
Thinking “it’s not going to happen to me” and not setting realistic expectations around a physical or cognitive decline in older age can get in the way of solid planning.
A sudden health crisis – like a heart attack or stroke – can prompt calls for urgent home modifications. Rehabilitation facilities can require a home evaluation prior to discharging a patient to return home, to ensure the home is safe and equipped for the patient’s mobility and care needs.
Setting realistic expectations around mobility, care, and how independently you may age can help you proactively design your retirement lifestyle and environment, rather than reacting in a crisis. And that can help you thrive and make the most of your retirement.
*This advertisement does not constitute financial advice. Please consult a financial advisor regarding your specific situation.
**There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.
Copyright©2021 Fairway Independent Mortgage Corporation (“Fairway”) NMLS#2289. 4750 S. Biltmore Lane, Madison, WI 53718, 1-866-912-4800. All rights reserved. Fairway is not affiliated with any government agencies. These materials are not from HUD or FHA and were not approved by HUD or a government agency. Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. The youngest borrower must be at least 62 years old. Monthly reverse mortgage advances may affect eligibility for some other programs. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Opportunity.
