Planning for Housing in Retirement

Retirement housing isn't just about location. One of the many wonderful aspects of being a retiree is the freedom to explore the wide range of senior living options available.

Whether you choose to stay in your current home, downsize, or relocate to a retirement community, it's essential to understand how much each option costs. Armed with this knowledge, you can decide which choice is best for you and your retirement budget. In this guide, we'll take you through everything you need to know about retirement housing, including the different types of senior living available, their costs, and how to choose the right place for you.

Discuss Your Vision for Retirement Housing

Before choosing where you want to retire, it's important to talk with your partner and establish a clear vision for retirement.

“It's hard to have a good financial plan if you don't really know what life is going to look like in retirement,” said Keri Dogan, senior vice president of retirement income solutions at Fidelity. Having a conversation with your spouse or significant other is fundamental. “One of my favorite pieces of research that we've done in the past was about those spousal conversations and how many times spouses don't have the same vision for retirement.”

Not all spouses are on the same page. “Sometimes we find that when we meet with spouses, they haven't talked about their vision for retirement,” Dogan said. “We have one spouse who's picturing moving to a farm in Vermont and another who's thinking about moving into an apartment in the city, and they don't realize it until they're a year from retirement.”

Dogan recommends starting with the basics. “Think about where you will live and if you will stay in your house or downsize.”

Another crucial step is having a conversation with your financial advisor. Make sure you have a firm grasp on what your retirement portfolio looks like, what you can afford, and how housing affects your overall budget.

Downsizing vs. Staying in Your Current Home

Many empty nesters realize they have more square footage than they need. Downsizing to a smaller home saves on monthly payments, utilities, and repair costs. It can also free up funds to pay for assisted living or nursing home expenses.

A home with a smaller footprint certainly helps simplify your life and frees up time to enjoy hobbies like vacations and travel. However, the emotional ties to a family home can be strong, and deciding to move is difficult.

The Downsizing Dilemma: 5 Questions to Ask Yourself

1. If you own your home, how much equity do you have?
2. Can you afford to stay in your current home for another decade (or longer)?
3. Can your medical or physical needs be met in your current home?
4. Is home and yard maintenance enjoyable or overwhelming?
5. Do you feel lonely or isolated?

Once you and your partner are on the same page and you've decided whether or not you want to downsize, it's time to look at your different options for retirement housing.

Types of Retirement Living Options

Aging in Place

Older adults who age in place choose to remain in their current home instead of moving to a retirement community. An essential part of comfortably and safely aging in place is ensuring extra care (such as home health care) is available and necessary home modifications are made.

How Much Does Aging in Place Cost?

Financial costs for aging in place are based on a person's medical and physical needs. For example, adding wall-mounted grab bars and a shower chair in the bathroom to prevent falls won't break the bank. However, extensive modifications come with a heftier price tag. According to HomeAdvisor, the average price of installing a stair lift is $6,000,1,and adding a wheelchair ramp averages $2,000.2

As you can see, home alterations and modifications can add up. The National Institute on Aging (NIA) suggests contacting your local National Association of Area Agencies for Aging to find additional resources.

Independent Living Retirement Community

Independent living retirement communities are designed for independent and active retirees. While some communities set the minimum qualifying age at 50 years old, the more common minimum ages are 55+ and 65+. Amenities are similar to those found in high-quality hotels, including swimming pools, fitness centers, beauty salons, restaurant-style dining, and security services.

You can find a wide variety of independent living retirement housing options like the following:

• Condominiums: Condos eliminate the burden of exterior property maintenance. You won't have to cut grass, shovel snow, or clean gutters ever again! Common amenities include a gym, pool, and parking garage.
• Senior apartments: Senior living apartments are designed for the needs of older adults. Many offer amenities such as dining, housekeeping, and community social events. Accessibility and safety features such as walk-in tubs make navigating the space easier.
• Independent living units: Housing options range from apartments to single-family homes, all with built-in accessibility features. Independent living units enable older adults to remain self-sufficient without feeling isolated. Resident amenities often include dining, a gym, a salon, and social activities.
• Co-op housing: Residents of cooperative housing collectively own the building and land where they live. Co-op residents are the stockholders in this unique nonprofit form of senior living.
• Townhomes: Larger than a condo but smaller than a stand-alone home, senior townhomes provide low-maintenance living without the responsibility of exterior property upkeep and repairs. Many townhomes include amenity-rich features such as a community pool, fitness center, and walking paths.
• Cottages: These stand-alone residences are part of a senior community, enabling older adults to live independently while enjoying a range of amenities. Recreational options often include tennis courts, swimming pools, wellness activities, and social events.

How Much Does Independent Living Cost?

Depending on the location, prices for independent living communities range from $1,500 to $4,000 per month. Independent living facilities often bundle rent, utilities, and amenities into the overall monthly cost.

Continuing Care Retirement Community

A continuing care retirement community (CCRC) is a life plan community offering an independent, amenity-rich lifestyle with access to onsite care if medical needs should progress. This continuum of care offers greater stability, allowing residents to stay in one community for the long term.

How Much Does Living in a Continuing Care Retirement Community Cost?

According to CBRE Group, a U.S. commercial real estate firm, the average CCRC entrance fee is $329,000. Monthly charges can range from $3,000 to $5,000 but can increase as needs change. It's important to note that these fees may include the cost of care, depending on the contract and community you choose.

Assisted Living Retirement Community

Within assisted living retirement communities, you'll find older adults who remain largely independent. While residents may need help with specific activities of daily living (ADLs), they don't require 24-hour medical attention. Common services provided in assisted living communities include meals, laundry, housekeeping, and transportation.

How Much Does Living in an Assisted Living Retirement Community Cost?

The size of the assisted living facility you choose, along with the types and number of services you need, all impact the final cost of assisted living. According to Genworth's Cost of Care Survey, the 2024 national median cost for assisted living is about $181 per day or $5,511 per month, totaling $66,126 annually. Assisted living communities are generally more affordable than a private or semiprivate room in a nursing home.

Nursing Homes

Nursing homes are residential care facilities that provide 24-hour care for older adults who need high levels of assistance with nonmedical, everyday living tasks. Support may include dispensing of medication, housekeeping, assistance with ADLs, and meal services. Senior care in a nursing home is more comprehensive than assisted living.

How Much Does Living in a Nursing Home Retirement Community Cost?

Genworth's Cost of Care Survey reports the estimated median nursing home cost for a private room is $330 per day or $10,025 per month, totaling $120,304 annually. Semiprivate rooms are slightly more affordable, with a median of $294 per day or $8,929 per month, totaling $107,146 annually.

Keep in mind that the above nursing home costs do not include higher-level skilled nursing, memory care for Alzheimer's and dementia patients, or hospice care.

Retirement Housing Planning Resources

According to the State of Retirement Planning Study by Fidelity Investments, a mere 12 percent of older adults aged 41 to 75 years have used online search tools to calculate how to afford their desired retirement lifestyle.

It's time to fire up your computer and take control of your future! Budgeting for housing during your retirement years doesn't have to be overwhelming. Simply tapping into the wide range of online resources is an excellent way to make more educated decisions.

A great place to start is understanding how much money you'll need for retirement and creating a budget. Additional financial planning resources for older adults include the National Council on Aging, the U.S. Department of Health and Human Services, and AARP.

Helpful Tips for Choosing a Senior Living Community

12 Retirement Community Questions to Consider

You've worked hard; now it's time to enjoy your retirement! There are quite a few factors to consider before choosing a new place to call home. Here are 12 important questions to get you started on your journey:

1. What are your expectations for daily life as a retiree?
2. What are your preferences for geographical location and climate?
3. What is the cost of living in the communities you're considering?
4. How will you pay for living in a retirement community?
5. What are the contract terms, entrance fees, and monthly association fees?
6. What is your plan for current and future health care needs?
7. Does the community offer recreational and leisure activities of interest, such as exercise classes, gardening, golf, or crafting?
8. What amenities does it offer?
9. Are there restrictions set on things like pets, visitors, or smoking?
10. Is the location a gated community?
11. What is the crime rate?
12. Are you eligible for municipal tax benefits like a property tax exemption?