Financial Benefits of Living in Retirement Homes

Moving to a retirement home is not an easy decision. Besides the physical, mental, and emotional aspects, there is also a financial angle because the fees and prices for retirement homes vary widely.

Retirement home costs vary according to the location, the type, and the intensity of care you want. Most residents of retirement homes pay monthly rent for their accommodations and services. Across Canada, the monthly fee ranges from $1,475 to $6,000, according to the size, location, the community type, the care needed, and the quality and number of amenities.

While planning for retirement, it is essential to research the costs of the type of retirement home you wish to live in beforehand to be financially prepared when you move. The type of care required is the primary determining factor when deciding the cost of senior care in retirement homes.

Suites in independent living are the lowest in cost and assumed as a part of basic amenities. However, if more care services such as assisted living, dementia care, and nursing care are required, the monthly fees or the costs increase. The cost of assisted living varies according to various factors such as the provinces and the location, whether it is in a small town or a large city.

Alzheimer’s caregiving and memory care for dementia patients is the costliest type of care. Long-term care costs are mostly covered by the Canadian government. In a long-term care home, care costs are all covered so that you only need to pay for the room and board.

There are so many retirement home options available for every budget these days. For instance, if you go for an independent living retirement condo in the Greater Toronto Area, a one-bedroom starts at approximately $240,000, while a two-bedroom suite can cost up to more than $300,000.

Lifelong leases give the seniors a stake in the community but no traditional homeownership. Residents have the right to live in their unit and use basic amenities such as dining rooms and recreational facilities.

These properties are sponsored by non-profit organizations, and the cost varies based on the location and the amenities. The average monthly rent in major cities across Canada is approximately $3,347, with Toronto being the highest at almost $4,050 and Ottawa being the lowest at $2,865.

If you move out of your home, you are leaving behind some expenses such as food costs, utilities, house rent if you are a tenant, condo fees, maintenance costs, realty tax, etc., if you are an owner. Depending on your lifestyle, you will save anywhere between $18,000 to $60,000 per year by not living at home.

When funding your life in senior living, you should consider all your sources of income like Canada Pension Plan, RRSP/RIFs, Old Age Security, TFSAs, and non-registered investment income. Also, pension plans for you and your spouse, family recreation property, long-term care, insurance covering health care costs, etc.

Do remember, that these funds are built over a lifetime and are intended to be used to cover your retirement expenses. Now is the right time. The average selling price of Canadian homes in June 2021 was $679,000, an increase of more than 26% over the last year. With the real estate prices soaring, Senior homeowners who have purchased their homes in the past will be pleasantly surprised at the amount of potential money at their disposal in home equity.

Compare your monthly expenses total to the monthly fees you would pay in the retirement home of your choice. Seniors should seriously consider how affordable moving into a retirement home is and how their personal life will improve immensely. A piece of in-depth advice from a professional financial planner at this stage would be a wise step.

• Retirement homes across the country offer special couple discounts on accommodation. 
• Look for prices you can manage based on your specific needs, the accommodation size and the desired locations.
• Choice of location, payments and services ultimately decides the monthly fees.
• Healthcare services and personal support are usually available for an additional fee.
• Enquire about the rates at retirement homes you are interested in beforehand.
• Most retirement homes allow residents to continue living independent and active lifestyles as long as possible. With lesser dependence on extra care provided by retirement home staff, the cost of independent living and active adult living are generally lower priced.
• The cost for intensive care like Alzheimer’s care and long-term care are a little higher.
• The cost of individual retirement home units varies depending on the size and the amenities and services you need.
• The costs of living in retirement homes located in densely populated areas, such as Toronto, Ottawa and Regina, are generally higher. So, choose your city wisely.
• If you anticipate starting from a retirement home and moving to a nursing home over the period, then it is wiser to consider a continuing care retirement community where both levels of care or kinds of facilities are available on one campus. The costs are comparable, and transition troubles and expenses are avoided.

First, determine the levels of care you need and the parts of your current life that are less than satisfactory. Jot down your existing living costs, including annual, like property tax, divided into monthly charges.

Now that you have your current basic needs and monthly budget, you are ready to consider your options. There are the following essential factors to consider when investigating retirement homes:

Especially the listed cost at a retirement home includes three daily meals and snacks. They also accommodate special diet restrictions, including dairy-free needs, low sodium or gluten-free diets, besides cultural considerations. You will need to find out the inclusions in the accommodation charges.

Many retirement homes include laundry and housekeeping, among general services. While heat, hydro, and other household expenses are included, phones, cable and internet are not. You should find the inclusions with the dining and meal plan and the flexibility. You may want more flexibility or want to manage costs by cooking some meals in your kitchenette or by eating out.

Some retirement homes offer luxury services like a diner, pub, or café where you will have to pay extra for the meals and drinks. To ensure that your rights are protected, your retirement home must be in good standing with regulatory bodies such as Retirement Homes Regulatory Authority (RHRA) in Ontario, the BC Seniors Living Association in British Columbia, and Alberta Housing Act.

Be sure that you understand all rental laws and rights before you sign the contract. Take the benefit of move-in incentives, if any. These may include the first month rent-free or free parking for six months. Do not forget to consider the rent increases and rental laws before you commit.

Care needs can never be anticipated accurately. Initially, you may be active and require independent living because you like the company, but as you age in place over a while, you may require other care services. You may consider assisted living needing one type of care service, but you may also need another in the future.

Ensure that you understand the maximum rate you will be paying, how fees are structured, how the firm is, and the rates for extra care services. Enquire what type of care is included in the advertised costs, as care billing varies widely in the country. In Alberta and British Columbia, the extra care services are administered and funded partially by provincial bodies. In Ontario, care plan fees are needs-based and re-evaluated quarterly or half-yearly.

You will also need to know the rates for each specific care service billed extra. You can pay for care services individually or hire your private care in some retirement homes. However, if you require multiple care services, it is better to switch to assisted living, where all care services come under one umbrella cost. In this case, will you be using all the health care services included?

Personal health care services include assistance with dressing, bathing, or feeding. Beware, incontinence care is often not included. You need to pay extra for medical management often as it puts the onus of responsibility on the retirement home. Nursing care is provided by professional staff. It includes medication, assessments and other nursing services.

Some retirement homes have weekly visiting medical doctors and nursing staff, while others have in-house registered nurses 24/7. The retirement home should disclose all care costs, so you know beforehand what costs you may need to pay for care services you anticipate in future. To analyze, refer to your medical history or that of family members. Confirm if you may hire private care in future, should the need arise. Discuss the terms of long-term care in the foreseeable future as well.

The in-house services in retirement homes might include pharmacy delivery, physiotherapy, hair care, etc. If they are not, you may purchase these from home care providers, if permitted by the retirement home. Find out if you are required to use the central pharmacy if there is one.

There may be additional charges for using their medication administration service or costs associated with visiting or in-house health care services. In case of outings, such as trips to the theatre, local attractions, or any special events, will you be billed separately, or are they included in the monthly fees?

Retirement home costs can be broken down into two categories – care services and rent. The care services include three meals a day, social activities, nursing care, and housekeeping, with quality, quantity, or level influencing the price. The rent depends on apartment size and location.

A resident who needs three hours of help with tasks like bathing, dressing, eating, and taking medication daily, will be charged more than someone who needs help with only one. Understand the various kinds of long-term care facilities. Apart from the monthly service costs and rent, most retirement homes charge a one-time move-in fee ranging from $1,000 to $5,000. You may choose to prorate the fee monthly or pay it upfront.

Some retirement homes offer services as a package and at multiple levels. The costlier packages provide a higher level of nursing care and more services. Whether you use them or not, you will have to pay for them. Alternatively, your retirement home may offer the option of paying for individual services. If you choose this option, you may pay more per service, but the overall cost could be less than the package rate.

Though these costs may seem very high, the daily average cost for healthcare at home and homemaker services are significantly more expensive than a retirement home, which also cover food cost as well. 

So, after considering the costs above, you need to figure out how much you have in home equity, pension, investments, and other retirement incomes like Canada Pension Plan (CPP) and Old Age Security (OAS), and how long these resources will last you in the chosen retirement home.

It is recommended to pool all your resources in fixed deposits, where your recurring quarterly interest will take care of your monthly expenditure at the retirement homes.

If you are falling short, here are ways to optimize your retirement income with other government sources of income, second careers or creative ways to earn extra cash at home.

Government Sources of Income

Older adults whose retirement income consists of government and private pensions and investments can also qualify for other government sources of income or subsidies such as the guaranteed income supplement, disability allowance, survivor pension, or veteran benefits.

Second Careers

Economic uncertainty and people living longer and healthier lives make a second or third career a viable option. The experience of seniors’ life, skills, talents and connections prove beneficial in career fields like health care, environment, education, government and non-profit organizations.

Planning, retraining and counselling with your current employer, determining your unique skills and talents, engaging and networking on social media, especially on business platforms like Linkedin, and other creative ways such as renting out the idle property such as driveway or basement, pet sitting, house sitting, doing sewing alterations, or personal shopping for your neighbours are easy and quick ways to make extra cash.

Although, at first glance, the retirement home might seem expensive when you consider the costs of a home health aid and homemaker services, living in retirement homes is cost-effective. Moreover, the health and social benefits of being among other seniors certainly outweigh the cost differences.

Before deciding to live in a retirement home, you must consider the cost of long-term care in your area and how you would meet the payments. For, you would not want your money to run out on you!