Financial planning for senior living

Financial calculations to consider when comparing senior living to staying at home.

Bruce especially liked the billiards room and coffee bistro when he toured a retirement residence but he was a little surprised at the monthly cost — until he started to break down his own living expenses. Bruce had paid off his house but he was still paying thousands a month to live there: property taxes, groceries, coffee, eating out, utilities, Internet and other bills, not to mention routine maintenance like household cleaning, lawn care and shoveling, as well as seasonal jobs like windows and gutter cleaning. Bruce’s house wasn’t getting any younger either: soon he’d need to do something about his 25-year-old bathroom. He began to compare living at home vs. senior living to see if it made sense — and whether he could afford it. To find out, he did the math.

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Step 1: Calculate your current cost of living

To compare the expenses involved in staying at home versus senior living, you can do the math. Include your current monthly expenses such as:

Household Expenses

  • Mortgage or rent
  • Contents and liability insurance*
  • Condo fees
  • Property taxes
  • Electricity
  • Heating
  • Water, sewage, garbage
  • Cable, Internet
  • Phone*
  • Meals, snacks, groceries
  • Entertainment (gym, clubs, outings, etc.)

*Not included in monthly service fee at Amica residences

Household Services and Repairs

  • Housekeeping, flat linens laundry
  • Gardening, snow removal
  • Home security monitoring
  • Major repairs and upkeep (furnace tune-up, gutter cleaning, appliances, roof replacement, etc.; estimate 1% of home’s value per year)

Total Monthly Expenses

Bruce soon realized that, with the exception of a few items, all-inclusive retirement living bundled all his usual expenses into one monthly service fee. He’d be getting services he desired, like daily meals, no more chores, an active lifestyle and the chance to stay in one place if he needed more assistance in the future. Next, he worked out the finances: could he afford senior living?

Step 2: Estimate your monthly income

You may have income from multiple sources including savings, a pension, etc. Tally up your monthly income to see what you can afford. Be sure to include the following:

Government Income Sources

  • CPP/QPP (Canada Pension Plan or Quebec Pension Plan)
  • Old Age Security
  • Guaranteed Income Supplement
  • Other benefits such as disability, Trillium Fund, etc.
  • Savings, Investment and Other Income
  • Retirement plans (RRSP or RRIF)
  • Life Income Fund (LIF) and Locked-in Retirement Income Fund (LRIF)
  • Investments (dividends, interest, TFSA, annuities, etc.)
  • Company pension plan
  • Other income (family, alimony, trust fund, royalties, rentals, etc.)

Monthly Income from Sale of Home/Cottage

  • Monthly income from real estate proceeds (note: proceeds can be invested to generate a monthly income; some seniors also draw on the principal to help pay expenses)
  • Estimate the monthly investment income (e.g., $400,000 invested at 2% generates monthly income of $675)
  • Estimate how much you will draw on the principal each month

Estimated New Monthly Income

Bruce discovered he’d have enough to cover his monthly expenses at Amica — with money left over. You can also consult your financial planner or tax planner to get help understanding the tax benefits and implications of moving to a retirement residence. For example, care services may be tax deductible.

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