How Retirees Are Saving Money by ‘Aging in Place’
Many working Americans dream about traveling the world once they retire, or even moving abroad to enjoy their golden years. For those that prepare well in advance and have significant nest eggs, these types of options may indeed be possible. However, the vast majority of older Americans either have health problems that might preclude such a lifestyle or don’t have a sizable enough retirement fund to cover all of these expenditures.
For these Americans, “aging in place” can be an excellent option to save money throughout retirement. As there are different interpretations of “aging in place,” here are a few options that you might consider if you want to maximize your cash flow in retirement.
Aging in Place in the Family Home
The easiest and most common option for seniors to “age in place” is simply to remain in the family home. If you’ve paid off your mortgage by the time you retire, you’ll save a ton of money by remaining in your “free” lodging rather than traveling and incurring additional expenses. This isn’t to suggest that there are no costs involved with living in a paid-off home. Even with no mortgage, homeowners face costs ranging from maintenance to property taxes to HOA fees. However, there’s no doubt that living in a home with no mortgage is more cost-effective than renting a new lodging overseas, or even in another city or state.
If you live in a home with a paid-off mortgage, it also opens the door to more advanced financial planning options. For example, you can take out a home equity loan or line of credit against the equity in your house to help pay for any number of expenses, such as landscaping, plumbing or roof repair. Just know that you’re using your house as collateral in the event you’re unable to pay back what you borrow. Reverse mortgages are another potential option, although you’ll want to talk to a financial advisor to see if this potentially expensive choice is right for you.
Aging in Place With Other Family Members
If you’re a senior with family members who are willing to let you live with them, this could be the optimal strategy for saving money in retirement. Not only will you live a rent- and mortgage-free existence, you won’t have to deal with other typical homeowner expenses as listed above. Even if you’re willing to contribute something financially to your new household, your total expenses are likely to be far below what you’d paid living in your own house. Bear in mind that this option also carries risks, such as the potential to strain family relations and the inability to control how the household operates.
Aging in Place in an Assisted Living Facility
Aging in place doesn’t necessarily mean you have to live in a place owned by you or your family members. There are many assisted living facilities and retirement homes available for seniors looking to develop a sense of community while saving on their expenses. These types of facilities do cost money, and some of them can be quite expensive. However, you may be able to find options that provide the services you need and desire while potentially still costing about the same amount as if you were living in your own house.
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Last updated: Nov. 3, 2021