Your Own Home vs. Assisted Living Facility: Cost Comparison

Does it make more financial sense to live at home or to move to an assisted living facility? For each person, the answer to this question will be different. The right answer for you will depend on many factors, including your personal abilities, the home’s architectural barriers, the size and condition of your home, and the number of caregiver hours you require.

In this article we highlight the financial aspects to take into consideration when deciding whether to stay in your own home, or move to an Assisted Living Facility or a Nursing Home. The financial aspects are of course only one of the components necessary for making this important life decision. To learn about the advantages and disadvantages of staying in your own home versus moving to a facility, visit our earlier article which addresses the pros and cons of these options (click here).

A breakdown of the general costs for living at home vs. moving to an Assisted Living Facility or a Nursing Home can be found below.

Expenses for Assisted Living Facilities & Nursing Homes

Following are the national monthly and yearly average costs for Assisted Living Facilities and Nursing Homes according to the 2012 MetLife Market Survey of Long-Term Care Costs:

• National Average Costs to live in a Nursing Home
  • Private room: $248 per day ($7,500 per month or roughly $91,000 per year)
  • Semi-private: $222 per day ($6,700 per month or roughly $81,000 per year)
  • Note: 80% of Nursing Homes do not charge extra for Alzheimer’s/Dementia care, while 20% do. Ask the policy at your local facilities, as this could add an extra $2,000-$5,000/year.

• National monthly base rates for an Assisted Living Home
  • Avg. Monthly Cost: $3,550 (yearly cost roughly $43,000)
  • Note 1: Some assisted living facility packages include food, transportation and care giving services in their base price; others require additional fees for these services.
  • Note 2: Most Assisted Living Facilities charge extra to provide care for an individual who has dementia/Alzheimer’s disease; on average these services cost an additional $1,000/month.

Depending on the state you live in, your own local rates may be significantly higher or lower than the national averages shown here. Some states’ rates can be as much as double these average rates. Check the 2012 MetLife Market Survey of Long-Term Care Costs for your state’s specific rates.

When deciding to sell your home to cover Assisted Living or Nursing Homes expenses, don’t forget to factor in the costs to sell the home! Selling a home comes with many expenses that need to be subtracted from the final sale price, including renovation, marketing the home, closing costs, broker’s commissions, pro-rated property taxes, document preparation fees and attorney costs; if a mortgage is still applicable, you may owe the current balance, interest and possibly fees for paying the loan off early. In addition, moving costs obviously need to be factored in as well.

What is the Cost to Stay in Your Own Home?

The answer for this has two aspects. You must take into account your average yearly (i.e., recurring) expenses, as well as the one-time costs for purchases of any equipment or carrying-out of home modifications that may be necessary to adapt your home for aging needs (e.g., ramp, stair lift, bathroom equipment).

The information presented below will give you a reference point for what you can expect in terms of cost if you opt stay in your own home. It begins with data on national averages for an individual’s monthly expenditures when living at home, followed by a section on average costs for typical home modifications.

a) Average Customary (Monthly) Expenses

According to the 2010 MetLife Report on Aging in Place 2.0, the average customary expenses for an individual’s continuing bills at home are as follows:

• $850/month for utilities, taxes, maintenance, etc.
• $250/month for food
• $456/month for three hours of daily assistance twice weekly at $19/hour
• $804/month for three days per week in adult day services

The Metlife study that collected these averages was performed in 2010, so it would be safe to assume that rates will have risen marginally from the numbers depicted here. Also, your own yearly expenses may vary significantly from these averages based on the state you live in, your ability level and the size and condition of your home. In order to get a more realistic sense of what the cost will be for you to remain in your own home, you will need to add up your yearly expenses for utilities, taxes, maintenance, food and caregiving services.

If you require more continuous around-the-clock caregiver assistance, the 2013 national average rates for a live-in caregiver are $160-$250/day. (Be aware that these rates may increase some due to recent changes in the guidelines for live-in caregivers.) Some of the cost for in-home caregiver assistance may be relieved by assistance from Medicare, Medicaid, and a federal program, called the National Family Caregiver.

b) Cost to Modify the Home

In my experience, the majority of people express that they would prefer to age in their own home. Recent studies are showing that in many cases it is actually cheaper for people to do so, however most people’s homes will require some adaptations in order to make this dream possible.

According to an AARP study, only 13% of homes are inherently ready to meet aging needs (e.g. have no stairs, wide doorways, accessible bathrooms); this, in turn, means that most people will need to make some structural changes to the home in order to successfully ‘Age in Place’. According to the 2010 MetLife Report on Aging in Place, the national average cost for basic design and structural modifications, commonly required to make a home suitable for aging needs, is $9,000–$12,000 per one-story residence.

The MetLife study goes on to say that “Using $10,000 as a sample cost for basic structural modifications, compared to assisted living costs at $3,000+/month, a simple equation shows that avoiding those costs for a little more than three months will pay for the cost of the home modifications. It will take about 14 months to break even on the modifications. And by the end of 24 months there is a net savings near $10,000.”

The cost to modify your home will vary based on a variety of factors including, but not limited to, whether you want to stay on the first or second floor of the home, the number of stairs your house has, the type of mobility device you use, your needs and abilities, and your personal style preferences. If you are unsure what it will take to modify your home, consider hiring a home accessibility specialist to help you in identifying the right solutions for your home and needs.

Following are examples of the national averages for some of the more common home modifications: a grab bar $90- $170 per bar; stair lift $3,000 – 12,000; a ramp or vertical lift $2,500 – $20,000; door widening $800-$1,300; bathroom modifications $3,500 – $35,000.

c) Will ‘Aging in Place’ Home Modifications Detract from the Value of my Home?

People often express concern that modifying the home for aging needs will detract from its’ retail value. This definitely doesn’t have to be the case – in fact, if done right, modifications can be made to blend seamlessly with the existing home and may actually add to the home’s retail value. According to the National Home Builder Association (NHBA), homes that are suitable for multigenerational living are currently one of the top trends for people seeking housing. Based on the swell in our aging population, we believe that this trend will continue to strengthen over the coming years.

Where should you begin?

The first step to take when determining whether it will be more cost-effective for you to live at home versus move to an assisted living facility is to gather the relevant pricing data for both options. Start by calling a few of the Assisted Living Facilities near you to get an idea of the local rates, and then compare this to the combined cost of your yearly household expenses and the money you anticipate needing to spend to make your home accessible.

More Topics You May Be Interested In:

1. Getting In & Out of the Bathtub: Benches, Lifts, and Transfer Chairs
2. Your Own Home vs. Assisted Living Facility: Stay or Move?
3. Buying a Walk-in Tub – Your Biggest Mistake?
4. Invest in Your Independence
5. The Truth About Home Modification Funding