Do I want to live in a Retirement Home?
When we get to a certain age, we begin to think about the time we might consider a Retirement Home, what the options are and the preparation for this decision?
By Jack Lumsden, MBA, CFP® Senior Wealth Advisor, Assante Financial Management Ltd. Burlington, ON.
As we enjoy our retirement years, we may ask ourselves, does it make sense to sell our home and move into a retirement home?
Retirement homes often have a few different living options such as:
• independent living,
• assisted living
• Memory care; these provide some health care for challenges such dementia. Often this may be used while waiting for a Long-Term Care facility.
Here are a few questions to ask when making that important decision of where to spend your golden years.
How reputable is the home?
When visiting a potential home, retirees should come ready with lots of questions. People should check for a clean environment, respectful staff and nutritious food, among other things. Check a retirement company's reputation by chatting with current residence and checking to see if it belongs to an accredited association.
How much will it cost?
According to the CMHC’s Senior Housing Report, in 2018, the average cost of renting a seniors’ housing space in Ontario was $3,038 per month. Keep in mind that in Ontario, retirement communities usually offer a higher level of amenities than in other provinces, and rent usually includes three meals a day, utilities, on-site medical services and a registered nurse, along with a variety of other services and amenities.
What level of care will I need?
People looking to move into a retirement facility must research what services it provides. Then they'll know if the offerings match their needs and won't cause surprise if their condition becomes too much for staff to handle. Here is a great article by CMCH on why move into a retirement home.
Can I afford it?
A big concern for seniors is if they can afford it or if it makes sense financially over the longer term, as they do not want to run out of money. The answer comes down to doing some basic math.
The basic steps involve:
• Estimate your new expenses (and compare to your current expenses)
• Review your current sources of income such as; Canada Pension Plan, Old Age Security, Pension Plans, Annuities, RRIFs/LIFs, and investment income.
• Find the income gap, (difference between your new expenses less current income)
• Withdrawal Rate, this is the annual income shortfall divided by the realized value of your home once sold.
• Estimate your time horizon
• Understand and Develop your Retirement Income Solution
Jack Lumsden, MBA, CFP, is a Financial Advisor in Burlington with Assante Financial Management Ltd. and has written a great article called How To Fund a Retirement Home that reviews current income, investments, and expenses to help answer the question Can I Afford it?
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