Successful Aging in Place Doesn't 'Just Happen'
It's a well-planned journey and here's how to make it more possible
Most older Americans hope to live at home for as long as possible, a practice referred to as "aging in place." In a recent survey, in fact, AARP found that 3 out of 4 adults 50 and older want to live in their homes and communities as they age.
The good news is that aging in place is "often the most cost-effective" housing solution for older adults, according to Orion Bell, president and CEO of the Benjamin Rose Institute on Aging in Cleveland.
About 75% of people 85 and older report some degree of permanent limitation in performing activities of daily living, such as eating, bathing or dressing.
"So, if that's what they want to do, then that's the ideal scenario," said Bell. "But it's a mistake to think aging in place just happens. Older adults and their families need to be active in creating a plan."
A critical part of that planning, he added, is money.
Home Modifications to Age in Place
Even minor changes to make a home more accessible can add up quickly. And people who'll stay in their homes as they age should expect to incur costs associated with upkeep they'll no longer be able to do — like lawn mowing and housecleaning — as well as the real possibility they will someday require help with personal or medical care.
Sonya Edwards, the broker and executive director of Branches Real Estate, a subsidiary of Benjamin Rose Institute on Aging, said about 75% of people 85 and older report some degree of permanent limitation in performing activities of daily living, such as eating, bathing or dressing.
Medicaid, in some limited situations, will cover person care assistance; Medicare does not.
Whether it's a one-time expense like a residential modification, ongoing care or both, Edwards suggested older homeowners and their families consider using home equity to help cover the cost of staying there.
Home Equity Loans and Home Equity Lines
Home equity loans and home equity lines of credit (HELOC) are two of the best aging-in-place funding options, according to Edwards, since either product can be obtained quickly with relatively low upfront costs.
Home equity loans, she said, are ideal for large one-time expenses that exceed $15,000, such as remodeling or pricey home repair projects. The loan is disbursed in one lump sum and payments are fixed over time.
HELOCs, on the other hand, are more like a credit card. The homeowner is given a set credit limit and can withdraw money as needed, which makes these credit lines better for ongoing expenses.
"So, if you plan to make modifications to the home over a number of years rather than all at once or want to ensure access to cash for unanticipated renovation or care expenses, lines of credit are a good choice," she said.
One drawback to home equity loans and HELOCs, Edwards noted, are the demanding financial and credit requirements that can be hard for some homeowners to meet. And monthly payments can be risky for people on a fixed income, particularly when unexpected expenses arise.
"These types of loans are secured by the home," she said. "If they aren't paid back, the senior could lose his or her home. Make sure there is a reliable re-payment plan in place and only borrow what is needed."
Pros and Cons of Reverse Mortgages
Reverse mortgages are another alternative. They get a "bad rap," said Edwards, and often for good reason. They are among the costliest loan products and homeowners lose "a lot of their equity" when taking out a reverse loan, she said.
"But they are not all bad," according to Edwards. Still, she added, "you have to be in the perfect storm to really make a reverse mortgage work."
Reverse mortgages allow homeowners over 62 to access a portion of the equity of their home as cash. Borrowers don't make monthly mortgage payments as long they continue to live in the home.
Credit requirements for reverse mortgages are often less strict than conventional home equity loans. That, and the absence of required monthly payments, are the two main advantages.
But because interest is added to the loan each month — and homeowners are not making payments — the balance on reverse mortgages grows over time. When the last borrower who signed up for the reverse mortgage dies or moves out of the home, the loan becomes due.
"Reverse mortgages are complex and complicated," Edwards said. "I recommend talking to an experienced housing counselor before going down that road."
In some cases, unfortunately, it may not be feasible to age in the home.
Older adults may also be able to take advantage of specialized programs designed to cover the cost of home modifications. Many states and municipalities, for example, offer grants and low-cost loans to make homes age-friendly and some organizations provide funds for veterans to adapt their homes at no cost.
Coming to the Right Decision
Edwards said older adults and their families should also educate themselves about tax and legal issues that affect their housing costs. Homestead credits available in many states, she said, can lower the tax burden and free up money for other expenses.
In some cases, unfortunately, it may not be feasible to age in the home. But Edwards said exploring financing options is an important step in coming to terms with the need to transition.
Bell stressed that one role of caregivers is to help their loved ones analyze and understand the prospective challenges that may come with aging in place, so they can arrive at an appropriate decision.
"There's a lot less resentment to it and a lot less loss of control to it when it's their decision," he said. "You might be a part of it, you might be the person they bounce ideas off of, you might make suggestions, but it's their lives, it's their decision."
Ultimately, Edwards added, the goal is to feel like you and your family have turned over every rock and exhausted every option before looking at other housing options."