The True Costs of Aging In Your Home! www.TheSeniorAgent.com Â
The informa3on provided herein is current at the 3me of wri3ng, for people living in the GTA.
Copyright The Academy for Seniors Real Estate, Inc. 2014
I Own My Home, It’s Free to Stay Here, Right? Here’s the story of George and Marlene, who s3ll live in the home they purchased 40 years ago. With Marlene in her mid-‐80’s, and George coming up to his 80th birthday, their lives have changed a great deal over their 3me in their home, and so has their neighbourhood changed.
Marlene has already surrendered her driver’s license, while George is worried about his upcoming 80th birthday re-‐tes3ng. George is sure he will fail his test, given the problems he has with his eyesight, and is very worried about the impact on their social life if neither of them are licensed to drive. On top of this, Marlene is ﬁnding mobility an increasing problem as her legs no longer seem to work the way they used to, and George is no3cing numerous nagging liOle things that are gePng to be more of a problem as he ages.
Despite their growing challenges, they are currently doing ﬁne, and when their kids, all of whom live in diﬀerent provinces, suggest they might beneﬁt from living in a re3rement residence, they don’t see any reason to move.
George and Marlene are on the same page when it comes to this, as they see that it is free for them to live in their home, but will cost a lot of money to move into a re3rement residence.
The real ques3on here is whether living in their home is actually free?
The Financial Picture
George and Marlene’s income consists of government and private pensions plus George’s investments. Income Source Amount OAS (Old Age Pension for both George and Marlene) $1,175.00 $1,230.00 CPP (George only) Company pension (George only) $ 975.00 RRIF (George’s RRSP that he $ 500.00 converted when he was 71 Total Monthly Income
There are other sources of funds or subsidies they might want to inves3gate, such as the Guaranteed Income Supplement (GIS), the Survivor’s Pension or a disability allowance to cover various health-‐care costs. Their home was appraised at $520,000. If they wanted to consider a reverse mortgage to pay for some of the costs incurred by staying in their home, they could get up to 50 per cent of the market value, or $260,000. Assuming 5% commission and $10,000 closing costs, selling the house could make almost $484,000 available to invest at a conserva3ve 2% for an annual interest income of $15,000 or $1,250 per month for 15 years, and s3ll have approximately $484,000 le] in their estate. 2
Current Living Costs George and Marlene have never really kept track of what they spend each month, so we asked them to keep a record. We warned them to be surprised, as most people are, at what they spend, and on what they spend it. These are certainly modest expenses for a couple. Income net of expenses is about $690, not an uncomfortable margin, but if medical costs came along, they’d be in trouble. In a recent (2014) study, it was revealed that Canadians 65 years old spent an average $54,000 per year from 2009 to 2012. Had George and Marlene been spending like this, they would certainly have found themselves in ﬁnancial trouble. On the next page is a breakdown of George and Marlene’s monthly expenses. Now, let’s look at four possible scenarios for George and Marlene: staying home with Community Support Services, with a private agency providing care, with live-‐in care, and moving to a local re3rement community. 3
Current Living Costs
Staying at Home Safety Check List Because many seniors have not updated their homes in years, and when they did, it was usually without regard to safety, a full safety audit should be done. This audit covers from the front door through to the basement, and focuses on things like: • Suﬃcient and bright ligh3ng • Non-‐slip ﬂoor surfaces • Updated and grounded electrical service and wiring • Reliable, energy-‐eﬃcient appliances • Grab bars and handrails • An accessible laundry area • An alarm system for home • Personal alarm lanyards • Cordless phones. These are just some of the things a Safety Audit will check. If you need help ﬁnding someone to do the audit, we have a number of specialists we can recommend to you.
Staying at Home Check List •
Mobility support: Mobility support is essen3al for someone like Marlene, whose bad knees (she’s too old to have them replaced) make her fearful of walking. Staying mobile is vital for errands, exercise and overall good health. TransportaQon assistance: Giving up driving is emo3onally devasta3ng, but transporta3on of some sort is essen3al for shopping, appointments and social ou3ngs. Op3ons include an account with a taxi company, support services like Home Instead (www.homeinstead.com), subsidized transit services, or volunteer drivers (o]en provided by service clubs). NutriQon support: Meals on Wheels is but one of the op3ons when it comes to having diverse food delivered to your home. In some communi3es there are several op3ons to choose from, including programs run by service clubs. Dinners sui3ng a diversity of cultural preferences can cost as liOle as $7.50, depending on where you live. Personal care: Personal care refers to bathing, grooming, and dressing. Marlene ﬁnds bathing diﬃcult and dislikes showers. George some3mes let his personal grooming go unaOended to, and since the laundry is in the basement, clothing may be worn just a few more days before being washed!
Staying Home with Community Support In this scenario, home safety must be addressed, which will inevitably mean some one-‐3me minor renova3ons for safety and access, and some basic safety equipment. Safety equipment could include things like a stair li], an electric li]ing seat to help Marlene get out of a seated posi3on, or a device to help her get out of bed.
Other items like shower benches, grab bars, and raised toilet seats cost less, but they s3ll add up.
Experts say you should plan on inves3ng 1% of your home’s value per year in having private home care.
George is quoted $73,000 per year for full-‐day homemaking and personal support services at $25 per hour or $200 per eight-‐hour day, not including any overnight support.
Ini3ally, most people don’t need 8 hours a day, so carefully assess what services are actually needed.
Staying Home with Community Support (conQnued) At this 3me, George and Marlene really only need assistance with laundry, general 3dying, and one bath a week for both Marlene and George. A subsidized community service is used for homemaking, and assistance with bathing is provided through the local Community Care Access Centre and covered by the provincial health plan. They also order two meals a day from Monday to Friday from Meals on Wheels. This halves their grocery bill and is arranged through the local community care agency. Sadly, George has to give up driving so they choose taxis for transporta3on. They also pay for a personal alarm system. George and Marlene should be able to aﬀord this approach on their current income for the next two to three years. 8
Staying Home with Community Support
Staying Home with Agency Care Marlene, in her mid-‐80’s, is in need of knee replacement surgery but the doctors have told her she is too old for the surgery and subsequent rehab. Wobbly, she falls and breaks a hip on the way to the basement laundry room.
A]er three months in hospital and rehab, she and George face a very diﬀerent scenario. During Marlene’s hospital stay, George con3nued with the usual supports but began to neglect his personal care and became depressed and increasingly forgekul.
The CCAC decide that Marlene and George need more help, so assistance with showers is increased and Marlene receives a total of one hour per day of personal care, as well as a weekly physiotherapy visit.
George’s need for help has increased greatly, as he now also needs help with personal care, cueing to prepare breakfast and microwave the frozen Meals on Wheels entrées, assistance on errands beyond what a taxi driver can provide, and general companionship. 10
Staying Home with Agency Care (conQnued) An eldercare consultant suggests that a permanent part-‐3me Personal Support Worker (PSW) should come in for 3 half-‐days a week. The PSW will provide morning personal care, prepare breakfast, do laundry and basic cleaning, heat and serve a hot lunch, check supplies and be sure George is clear about hea3ng up dinner. In other words, she will make sure things are under control. She will also use their car to accompany them on errands. She will be hired from an agency so she will be more expensive, but the agency guarantees that she is bonded, insured and health and police-‐ checked. She will also be automa3cally replaced if unavailable or ill and will be supported by an agency registered nurse for ques3ons or concerns. All billing will be handled through the agency oﬃce at a rate of $25 an hour. 11
Staying Home with Agency Care (conQnued) A new challenge that George and Marlene now face is that these new care requirements include reinsta3ng the car expenses and increasing the car insurance for a non-‐family driver, for a very diﬀerent monthly cost and a challenge to their current monthly income of $3,880. To pay for the services of their PSW, their son looks into a reverse mortgage so that they can access the capital in the home. The payouts are tax-‐free, and George and Marlene need not begin repayments as long as they live in the house. However, they are leery of pledging the home they worked so hard to pay oﬀ, a common situa3on for many seniors. This is a major ﬁnancial decision that they should discuss with a trusted ﬁnancial advisor, as well as with their family. 12
Staying Home with Agency Care (conQnued) •
If a reverse mortgage is chosen, George and Marlene can choose to receive a lump-‐sum payment, which they could invest in an annuity, or to receive monthly payments based on their stated needs. In Ontario, there is a Provincial program that provides assistance with municipal property taxes, and there may also be other tax programs available through the local revenue services department. The family should be sure that any tax credits have been applied for, especially the disability and aOendant-‐care credits.
Staying Home with Agency Care
Staying Home with Live In Care As he approaches his 80th birthday, George is demonstra3ng increasing signs of demen3a and is reluctantly taking medica3on to help slow its progress. He is also on other medica3ons, including one for high blood pressure. Marlene’s broken hip from several months ago has never healed properly, resul3ng in her requiring increasing doses of pain medica3on. They had to have a stair li] installed to allow her access to the bedroom and bathroom. Medica3on is delivered pre-‐ﬁlled in a blister pack from the pharmacy, so their permanent part-‐3me PSW only need remind them to take their pills. However, some3mes when she arrives in the morning, the dinner3me and bed3me doses have not been taken. So far, they’ve managed to pay for these extra costs from a savings account George had kept in reserve. George and Marlene clearly need more 3me devoted to the management of their daily care and household opera3ons. 15
Staying Home with Live In Care (conQnued) With George’s increasing level of demen3a, he is becoming unbearably overwhelmed with not only banking, bill paying, decisions about house and car expenses, but any devia3on from the rou3ne seems to overwhelm George, and his sons are becoming more involved. The prospect of aﬀording a PSW for eight-‐hour days is daun3ng – $200 a day ($73,000 per year!) -‐ and George and Marlene’s sons are also rightly concerned about their parents being home alone at night, given George’s recent habit of wandering and the overall decline of their neighbourhood. The cost of the type of around the clock they need would reach over $200,000 per year, completely unreasonable for them. Their sons suggest hiring a live-‐in assistant through the overseas Live-‐in Caregiver Program oﬀered by Human Resources and Skills Development Canada. But the placement would cost at least $3,000, payable to an agency, would take up to four months to complete, and the caregiver’s approximate salary for a 44-‐hour week would be $1,100.
Staying Home with Live In Care (conQnued) The idea of a live-‐in caregiver sounds great, but this op3on comes with one incredibly big considera3on: George and Marlene would be their caregiver’s employer. At a 3me when both of them are facing increasing health challenges, they must now supervise a live-‐in caregiver and manage all of the paperwork? This would include keeping a record of their live-‐in’s regular and over3me hours on a weekly or monthly basis. This informa3on will be needed for the live-‐in's applica3on for permanent residence. George and Marlene must also pay for: • The $3,000 placement cost. (This is the fee they pay to the agency that ﬁnds the caregiver). It could take up to 4 months to process everything, including visa and immigra3on papers and health and criminal record checks. • Mandatory beneﬁts for the live-‐in including workplace safety insurance for the dura3on of their employment, and medical insurance coverage un3l he or she is eligible for provincial health insurance. • TransportaQon costs to bring their live-‐in from his or her home country to Canada. 17
Staying Home with Live In Care STAYING(HOME(WITH(LIVE>IN(CARE ITEM MONTHLY(COST Housing(costs(as(per(baseline $810.00 TOTAL(HOUSING(COST $810.00 Groceries((including(live:in(care:giver) $750.00 TOTAL(FOOD(COST $750.00 Car(Insurance(&(Repairs $150.00 Gas(for(car((4(fill:ups/month) $220.00 TOTAL(TRANSPORTATION(COST $370.00 Lifestyle(costs(as(per(baseline $1,560.00 TOTAL(LIFESTYLE(COSTS $1,560.00 Personal(Alarm(System $55.00 Assistance(with(bathing((covered(by( provincial(health(plan) $0.00 Full(time(live:in(care(giver((44(hours/week(@( $25/hour) $4,767.00 Care(Manager((1(hour/week(@($125/hour) Home:making(((4(hours/week(@(subsidized( rate(of($15/hour) TOTAL(HEALTH>RELATED(COSTS MONTHLY(EXPENSES(WITH(LIVE>IN(CARE
$500.00 $260.00 $5,322.00 $9,072.00
Moving to a Local ReQrement Community Marlene experiences a health crisis, which results in a trip to the emergency department. She realizes that it is 3me to seriously look at re3rement communi3es. If she had another episode, she might have to move to long term care and George would be le] alone. Her son retains an eldercare consultant to assess their demographic, social, geographic and care needs, to revise their budget again, and to make a short list of re3rement residences. Based on selling the house for $520,000 and assuming they earned 2% on their house proceeds of $484,000, they would have $15,000 a year, or $1,250 a month, to augment their current cash ﬂow. They would have a poten3al monthly income of $5,130, without touching the capital. Alterna3vely, the sum could be used to purchase an annuity to top up the monthly income. 19
Moving to a Local ReQrement Community (conQnued) George and Marlene decide to view medium-‐range residences from three large re3rement chains. For a one-‐bedroom suite of 400 square feet, three meals and snacks, all ac3vi3es, a 24/7 nurse on call and weekly doctor visits, they are quoted $4,200 for one person and $750 for the second person sharing the suite. A “care package” of $800 is quoted for Marlene to have assistance with medica3on, morning and bed3me personal care and three baths per week, for a total of $5,750 per month. At ﬁrst glance, that seems like a he]y monthly fee, but let’s compare it to staying home with a live-‐in caregiver, which would have given George and Marlene only 44 hours of support a week. At the re3rement community, many services are included that they would have paid for had they stayed at home. 20
Moving to a Local ReQrement Community
At home with live-‐in caregiver
Paying for 44 hours of live-‐in support per week/days only (no assistance during the night).
Support is available 24/7, as needed, and is typically included in the monthly fees.
TransportaQon to doctor’s appointments. Weekly visits from a private caregiver who will: • Direct the live-‐in's implementaQon of any treatment plans for George and Marlene • Make sure medicaQon is taken • Make sure medical appointments are made and followed up on • Monitor any changes in George or Marlene’s health
Weekly doctor visits on-‐site. (included) Care Package: On-‐site assistance with medica3on, morning and bed3me personal care and three baths a week. (extra) * They can purchase more help when they need it in a shared care arrangement oﬀered by the re3rement residence so they don’t need to hire a private caregiver.
Meals on Wheels. Household costs such as: Property taxes, uQliQes, food, maintenance, entertainment etc.
Three meals per day plus snacks. (included) George and Marlene no longer have to pay for many of their regular household expenses because most are included.
In Summary So, have George and Marlene “spent smart” to make the most of their money? • In Scenario I, the couple was somewhat in denial of their health and lifestyle needs. They made minimal changes to their lifestyle, although accep3ng Meals on Wheels probably made the largest contribu3on to their health, making it very easy for them to eat healthy, balanced meals. It also opened the door to their accep3ng outside help. This is o]en the sign that more help is going to be needed soon. • In Scenario II, hiring their permanent part 3me PSW was undoubtedly costly and making up the shorkall did deplete George’s savings. However, it allowed the couple to stay in their home, use their car and keep up the semblance of their usual life. This was an important phase in their transi3on to accep3ng help in their own “space,” especially for Marlene. When Marlene’s health and George’s demen3a meant more hours of PSW support were needed, it would have been impossible to fund. In fact, their sons were planning to review the situa3on with them when Marlene was admiOed to hospital with her most recent health crisis. 23
In Summary •
In Scenario III, even if having a live-‐in caregiver seemed ﬁnancially aﬀordable, they would have required the services of a care manager to supervise and direct the care; a family cannot simply hand a caregiver the house keys and hope for the best! A care manager would ensure that medica3on was taken and medical appointments were made and followed up on, and she would also monitor changes in health condi3ons and direct the caregiver in implemen3ng treatment plans. A typical care manager would charge $125 per hour and be needed at least one hour per week in this scenario. In Scenario IV, moving to a local re3rement community, although George and Marlene are paying more per month than in scenarios I & II, they are saving on many expenses that are no longer required. They will also be able to acquire more care -‐ at $25 per hour, in 15-‐minute increments -‐ when they need it in a shared-‐care arrangement oﬀered by the re3rement residence, rather than having to hire someone privately. This alone represents signiﬁcant savings for George and Marlene. 24
Summing It All Up Staying at home while you age is a wonderful idea, but if it is to be an eﬀec3ve, safe alterna3ve, it is not free. And it is o]en more costly than what you would pay in a re3rement community. You also have to take into account the unseen costs of social isola3on, which is far less likely in a re3rement community. The key is for family members to discuss plans for re3rement or long-‐term care well ahead of 3me. Having a prac3cal and caring discussion early on is much beOer for everyone than having to make decisions in a hurry a]er a health crisis. As always, knowledge is power, so gather your informa3on now to face the challenges of this wonderful chapter of life with conﬁdence and success. If you need any help with the informa3on contained within this document, or you need assistance loca3ng resources, please make sure you reach out to me.
This informaQon is courtesy of: