Your parent is living at home with the support of home health care, but the costs are starting to add up. At what point is it actually cheaper to move to assisted living?
It’s a question that many families face.
Here’s where some people go wrong when crunching the numbers. They focus exclusively on care costs when calculating the cost of staying at home.
They might say, “Okay, the cost of having home health care support Mom is $3,600 a month. Whereas the monthly fee for assisted living is more than that. So, staying at home is cheaper.”
What’s the matter with that logic?
It doesn’t factor in living costs.
Consider this: Your parent is paying a certain amount each month to live in their own home. They pay for things like property tax, utilities, home insurance, property maintenance, groceries or eating out, and so on.
In assisted living, many of those costs are built into the monthly fee.
Here’s a more accurate comparison:
Let’s face it. What you’re really interested in is the bottom line. What’s everything going to cost when all is said and done?
And here’s another thing to consider: If they own their own home, selling it will give them money they can use for any number of things, including helping to pay for assisted living costs.
According to The Financial Post, seniors who move to a retirement residence or a nursing home can save anywhere between $18,000 and $60,000 a year that would otherwise go to the costs of continuing to live in their own home.
Let’s say your parent is considering moving to assisted living in a retirement community, and the monthly fee is $5,000. Your immediate reaction might be, “Where are they going to find an additional $60,000 each year?”
In fact, the difference in cost between them continuing to live in their current home with, say, 30 hours of paid care per week and getting the same amount of support in assisted care is likely a lot less than that.
Consider that, after a move to assisted living, your parent would no longer need to pay for property tax or annual property maintenance. That might save them in the neighbourhood of $15,000 a year. Things like food and utility costs would likely be covered by the monthly fee for assisted living. Let’s say that’s another $20,000 a year.
Then calculate the cost of 30 hours of paid care per week in their current home. (Only a limited amount of government-funded home care service is available, meaning that many people “top up” this service by hiring staff directly from agencies.) Currently in Ontario, hiring a personal support worker through an agency costs in the range of $28 to $35 per hour. This translates into $43,630 to $54,600 per year.
If your parent were living in assisted living, many of these services would already be part of the monthly fee. But let’s say your parent chooses to pay for an add-on service package (above and beyond the monthly fee) at a rate of $800 per month that gives them extra help with their personal care each day. That amounts to an additional $9,600 per year.
If we run the numbers in this particular example, here’s how the total costs would compare.
Surprisingly, the annual cost of assisted living is actually $12,200 less per year than continuing to live at home with paid support.
Surprisingly, the annual cost of assisted living is actually $12,200 less per year than continuing to live at home with paid support.
Of course, results will differ depending on the numbers you plug into the calculation. For instance in this same example, if your parent only requires 20 hours per week of paid services to support them in their current home, assisted living comes out slightly more expensive, but only by about $3,400 per year.
Is assisted living affordable for your parent?
The only way you’ll be able to tell is to compare costs using a similar process. Replace the numbers in the table above with actual figures for your parent. And if you’re considering a particular retirement residence, insert their monthly fee for assisted living plus any relevant additional fees.
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