If you’re like many retired Americans, your home mortgage already is paid off, or soon will be. At last, you own your home free and clear. It’s hard to beat that kind of security—a roof over your head, and it’s all yours. 

But your home is much more than a place to live. It’s also a major financial asset that probably has increased substantially in value over the years. As such, it deserves the same careful consideration that you give any of your financial investments. 

The market value of your home, even if you still have a few years left on your mortgage, will figure prominently in your calculations should you decide to join the millions of retired Americans who have moved into apartments or retirement homes and communities.

Looking into your heart

The decision to give up your home in favor of fewer responsibilities is a highly personal one. It involves emotional considerations as well as an objective look at the economic consequences.

Examining your finances

Still, many people have even greater concerns about another issue—money. Will their pension, Social Security benefits, and income from savings be sufficient to meet the usually higher costs of retirement-home living? That’s the most important question facing the typical retired couple considering such a move.

Most retirement communities offer help in answering that question. Counselors will review your financial situation to see whether you meet their minimum requirements for entrance. 

However, when first considering a move, you will want to perform your own careful analysis. The table on page 48 will help you compare your present cost of living to the costs you can expect from several retirement options.

The figures in the table compare present costs for one couple living in their own medium-priced home with the average apartment and retirement home costs in one metropolitan area. The sample figures serve only to help you understand how to use the table. Actual costs will vary by geographic area and retirement option. By inserting the figures applicable to your circumstances and your area, you will see the difference in cost of living that you can expect from the various options.

For seniors in good health, the choices in retirement homes fall into two broad categories. Independent living homes include little or no medical care in their fees. These communities feature convenience, security, meals, recreational facilities, and other amenities that make for a relaxed lifestyle with minimum responsibilities.

Continuing care retirement communities (CCRCs), also called Life Care retirement communities, offer all of the amenities of independent living, plus guaranteed medical care for life once the resident is no longer able to manage alone.

Another classification of retirement community, not reviewed in this article, is known as assisted living (see The Retired Officer Magazine, September 2002, “Getting by With a Little Help,” by Peter Weaver). This type of residence is for people who are no longer able to manage alone.

In the sample table, all figures have been broken down to monthly costs to make it easier to compare them. Only costs that will vary from one living option to another are included.

• Maintenance is the monthly cost averaged over several years for such items as repairs, yard work, and other things associated with home upkeep. You should add the cost of any pending large items, such as roof or heating/cooling system replacements, that you know will be needed in the near future if you stay in your home.
• Several meal plans are included in most retirement homes, from one meal to three meals daily. The table includes an estimated amount based on the choice of two meals daily, plus occasional dining out. Adjust this figure based on your preferences and the choices available in various homes.
• Monthly rent is for two people. A single person must adjust retirement home rentals downward based on prices supplied by local residences.
• Estimated lost interest after taxes is an estimate of the income you would get if you invested the proceeds from the sale of your home. It is based on 5 percent interest and you may adjust it to suit current local conditions.

This figure will vary among the retirement options depending on whether the upfront deposit is less than or more than the proceeds from the sale of your home. For example, the figure is highest under “upscale Life Care home” because the entrance deposit is higher than the proceeds that would come from the sale of the home in the example. The figure is zero under apartment living because there is relatively little upfront deposit in most apartments.

Many independent living communities do not provide medical services as part of their occupancy fees. Of the communities that do offer such services, there are major differences. Some offer on-premise medical care only on a fee-for-service basis. 

The highest level of medical care—and the highest-cost arrangements—are offered by the Life Care retirement communities.

Choosing a place

When you’ve decided to move to a retirement home or community, you’ll have to further refine your search to find the one right for you. There are important differences in operating philosophies of retirement homes. For example, many retirement communities are designed especially for retired military personnel.