Can Reasonably Well Off Elderly Mom Afford A Nicer Home?

[AnnetteLouisan]

Briefly: mom is 90, owns her extremely modest home in an MCOLA outright. She is considering a move to a larger, healthier, cheerier, serviced suburban rental I found on a nice larger wooded plot of land closer to her friends for her final months, years or hopefully a decade or two.

Here are her stats.

Portfolio:

$939k in CDs and HYSAs. All fixed income. No equities.

Other assets: $1.6 million in a residential real estate portfolio (w significant LTCG). A car worth approx $24,000.

Income:

$10,020/mo, consisting of pension, SS, interest and rental income

Debt: $0

Expenses: $8500/mo. $12,500 for a live in home health aide ($5500/mo is offset by LTCI on which 158k and 2.5 years coverage are remaining), so $7k mo out of pocket for the aide.

Remaining $1500/mo costs are cable, food, electricity, water, cable TV, pest control, real estate and income taxes, accountants fees, phone, dining out, household items, charitable donations, gifts, repairs, insurance, garbage collection, and medical (she’s on Medicare and they pay for most of her medical expenses).

How much can she pay for a rental ($5-6500/mo?) and should she spend down her cash first or sell one of her rentals. Or should she just stay put and hope her $ outlasts her? Thank you.

My thought is that she can pay up to $7,000 per month given her life expectancy, very slow rate of burning up her savings (actually she is even coming out ahead currently), and given her income. If she has a healthier home on the nice plot of land she might live longer.

[HomeStretch]

Is your mom planning to sell her home when she moves to a rental? What is the value of the home?

At age 90, your mom can easily afford to spend $7k/month or much more given her assets.

[AnnetteLouisan]

Is your mom planning to sell her home when she moves to a rental? What is the value of the home?

At age 90, your mom can easily afford to spend $7k/month or much more given her assets.

Value of her home is between $350,000-$400,000 at most, currently, but the area is on an upswing in terms of home values and rental prices. She’d rent it out. She can easily get $2500/mo for it. If she did, her gross monthly income would be $12520. Expenses: $8500 (or $15,500 with a $7k rental). So she’d only be eating up her assets at a rate of $3k/mo or $36k per year.

[bd7]

If she spends the $400k that she'd get from selling her home and bought an SPIA, the income would be about $6k/month guaranteed for life. That would pay the rent indefinitely and would take almost all the uncertainty out of a situation that really doesn't have much in the first place.

[rogue_economist]

Nope, stay away from rentals in retirement. The lack of cost certainty on your largest (or possibly second largest if healthcare becomes major) expense is taking on too much risk.

[rogue_economist]

If she spends the $400k that she'd get from selling her home and bought an SPIA, the income would be about $6k/month guaranteed for life. That would pay the rent indefinitely and would take almost all the uncertainty out of a situation that really doesn't have much in the first place.

No, oh absolutely no. "That would pay the rent indefinitely", no, this the kind of dangerous blanket statement that can result in disaster. There is no guarantee that amount of income would pay the rent for life. What happens if the rent goes up 40% in a two year time span? Hmm? Rent is dangerous, and an annuity of all things is not the way to remove that risk.

[bd7]

No, oh absolutely no. "That would pay the rent indefinitely", no, this the kind of dangerous blanket statement that can result in disaster.

Perhaps in "general" such a statement would be risky, but in context of this thread I think there's little chance of a financial disaster. Even rent going up 40% isn't going to be an issue here.

Did you read the OP carefully? If not, have another look. This is the precise sort of situation where an SPIA can be helpful. Maybe even a bigger one.

[Arthur Digby Sellers]

If she spends the $400k that she'd get from selling her home and bought an SPIA, the income would be about $6k/month guaranteed for life. That would pay the rent indefinitely and would take almost all the uncertainty out of a situation that really doesn't have much in the first place.

What happens if the rent goes up 40% in a two year time span? Hmm? Rent is dangerous, and an annuity of all things is not the way to remove that risk.

I suppose she would need to tap into the $2.5 million in other assets she has. There is no realistic way that she will run out of money. She should use her assets to obtain the best living situation she can, and if that is a rental it is just fine.

[gotoparks]

Just sell the current home and rent the new place. I don't see this as even a question.

[rogue_economist]

If she spends the $400k that she'd get from selling her home and bought an SPIA, the income would be about $6k/month guaranteed for life. That would pay the rent indefinitely and would take almost all the uncertainty out of a situation that really doesn't have much in the first place.

What happens if the rent goes up 40% in a two year time span? Hmm? Rent is dangerous, and an annuity of all things is not the way to remove that risk.

I suppose she would need to tap into the $2.5 million in other assets she has. There is no realistic way that she will run out of money. She should use her assets to obtain the best living situation she can, and if that is a rental it is just fine.

Not running out of money is always the wrong goal. The goal should be to not deplete assets to the degree that becomes worry inducing. Watching your retirement funds dwindle in old age is a source of significant anxiety and undue stress. Its not enough to still have $10k in the bank when you die, because for years before that you will be worried about not having enough. Not only that, but its not desirable to squander all of the money that would otherwise go to the heirs.

Tapping into other assets to support soaring rent prices seems foolish. She can afford to own a home, why add rent risk into the mix?

[bd7]

Tapping into other assets to support soaring rent prices seems foolish. She can afford to own a home, why add rent risk into the mix?

Are you joking or just feeling exceptionally contrarian today? I really can't tell.

In any case, while you may worry about "soaring" rent prices, house purchase prices have not exactly been left behind. She might benefit from a nicer home, she has an actuarial lifespan of 4.65 years and is already in LTC (at home) and is extremely unlikely to still be living in a private residence 10 years from now. She has assets to easily support that even if the rent triples. How much would this nicer house cost to purchase? Add in the non-negligible burden of home ownership on a disabled 90-year old and I think this is all pretty easy to figure out. I only suggested the SPIA to point out that she could trade the modest home for a guaranteed income stream that would cover most of her rent indefinitely. Her situation works out fine without it as well.

[rogue_economist]

Tapping into other assets to support soaring rent prices seems foolish. She can afford to own a home, why add rent risk into the mix?

Are you joking or just feeling exceptionally contrarian today? I really can't tell.

In any case, while you may worry about "soaring" rent prices, house purchase prices have not exactly been left behind. She might benefit from a nicer home, she has an actuarial lifespan of 4.65 years and is already in LTC (at home) and is extremely unlikely to still be living in a private residence 10 years from now. She has assets to easily support that even if the rent triples. How much would this nicer house cost to purchase? Add in the non-negligible burden of home ownership on a disabled 90-year old and I think this is all pretty easy to figure out. I only suggested the SPIA to point out that she could trade the modest home for a guaranteed income stream that would cover most of her rent indefinitely. Her situation works out fine without it as well.

Purchasing it is not a cost, as you can get the equity back out. Rent however is money flushed down the toilet.
Yes I'm contrarian on this point, because I listened to the Boglehead line on renting and got bit badly by it. So I put out the other side of the story to combat the group think.
If she is so bad off as described then realistically there is little value added by having a nicer home, so staying put seems like a reasonable option.

[celia]

Paying for anything is not a problem for her. I recommend selling not only her house, but one rental a year to spread out the capital gains (unless you are looking for a step-up in value when she dies).

I would take her future needs into account by looking for an upscale assisted living near her friends, so she wouldn't have to move again if her health declines. Look for an open area (forest?) if you wish, but group activities and level floor throughout are needed. Do they offer music, art activities, and games? Do they drive the residents to shopping or community events (concerts, plays, movies, sports events)? Can the residents leave on their own (assuming she is capable to drive and return)? Do they take food preferences for the residents into account?

Being in group living will provide her with 24-7 care that she may eventually need and wouldn't have to move again. Since the caregivers work with all the residents, "sharing" them with other residents will cost a lot less than hiring a dedicated caregiver for one person.

[CaptainT]

She can easy afford this. She is 90 with more then 2.5 million +pension +ss. We are not looking at a 30 year retirement we are looking at 10 years hopefully. She can spend 10% a year or 21k a month (+ pension +ss so likely something like 25k a month) Help her move wherever she will be happiest to live.

[PeninsulaPerson]

She is considering a move to a larger, healthier, cheerier, serviced suburban rental I found on a nice larger wooded plot of land ...

It's good that it's something she might want.

Sounds like she can afford it and has multiple ways to pay for it.

She's lucky to have you to help her figure it out.

My only consideration is that moving is enough of a chore that perhaps a CCRC would be better overall. Saves her the money on an aide and they are prepared for older people in so many lovely ways. Many around here are outside of town centers in particularly woody locations.

Where do her older friends live now? Any in a local CCRC?

[AnnetteLouisan]

She is considering a move to a larger, healthier, cheerier, serviced suburban rental I found on a nice larger wooded plot of land ...

It's good that it's something she might want.

Sounds like she can afford it and has multiple ways to pay for it.

She's lucky to have you to help her figure it out.

My only consideration is that moving is enough of a chore that perhaps a CCRC would be better overall. Saves her the money on an aide and they are prepared for older people in so many lovely ways. Many around here are outside of town centers in particularly woody locations.

Where do her older friends live now? Any in a local CCRC?

There’s a lovely CCRC nearby. It has a very good reputation. It’s equity based and starts at a half mil to buy in. They also have a way to stay there for a few weeks or months to try it out. She had a bad experience with a substandard nursing home and prefers not to be in a facility.

To answer your question, she has some friends in local assisted living but her best friends live in their own homes nearby where she would be moving to.

[HomeStretch]

… She had a bad experience with a substandard nursing home and prefers not to be in a facility.

I understand your mom’s preference but an elderly person with health conditions may need more support than a paid caregiver while living in a their private home.

Does your mom have any family nearby that can assist with keeping an eye on her care, health and living conditions? What happens if a caregiver quits or is ill, or if your mom is hospitalized, or a major home repair is required?

Is your mom managing the rental properties? It is not common ime for a 90-year old with health issues to have or be adding to a rental portfolio. Many simplify as they age. If she sells the primary residence, she has a capital gain exclusion which will shield all or a large portion of her gain from taxes.

[PeninsulaPerson]

She had a bad experience with a substandard nursing home and prefers not to be in a facility.

Hate to see a bad "nursing home" experience keep your Mom from considering a good CCRC as it's all the difference in the Universe.

I bet if she tried it for a few months, she'd never want to leave.
And you might feel very much at ease with her in such a convenient, safe place.

Plus she could keep her house while she tried it out.

Does she have friends there?

(CCRCs are one of the best inventions of the past 100 years! They're not "just" facilities, at all!)

[PoppyA]

Is moving to a new place something your Mother wants to do?

[Jack FFR1846]

There are all levels of senior care facilities. Having gone through a dozen near us for our parents, we've seen the differences in facilities and price. We were looking mainly at independent with step up to assisted. All of them appear to be 5 star hotels when you walk in. Costs vary based on what's provided and size of apartment but I saw none hit $7k a month for independent or assisted. All of the facilities we looked at had health care assistants available for any number of hours a week needed. For far less than $12k a month, she could use one of those people. All of the ones we saw charged simply by the hour.

Why does she have a car? There's an easy cash trade right there.

[AnnetteLouisan]

Is moving to a new place something your Mother wants to do?

It wasn’t her idea originally but having seen a few options I showed her, she is realizing there may be benefits to a healthier, more spacious and cheerier place. Her current house is very far from ideal and she can afford something nicer but still in tune with her values and lifestyle.

[student]

Tapping into other assets to support soaring rent prices seems foolish. She can afford to own a home, why add rent risk into the mix?

Are you joking or just feeling exceptionally contrarian today? I really can't tell.

In any case, while you may worry about "soaring" rent prices, house purchase prices have not exactly been left behind. She might benefit from a nicer home, she has an actuarial lifespan of 4.65 years and is already in LTC (at home) and is extremely unlikely to still be living in a private residence 10 years from now. She has assets to easily support that even if the rent triples. How much would this nicer house cost to purchase? Add in the non-negligible burden of home ownership on a disabled 90-year old and I think this is all pretty easy to figure out. I only suggested the SPIA to point out that she could trade the modest home for a guaranteed income stream that would cover most of her rent indefinitely. Her situation works out fine without it as well.

Purchasing it is not a cost, as you can get the equity back out. Rent however is money flushed down the toilet.
Yes I'm contrarian on this point, because I listened to the Boglehead line on renting and got bit badly by it. So I put out the other side of the story to combat the group think.
If she is so bad off as described then realistically there is little value added by having a nicer home, so staying put seems like a reasonable option.

OP said "She is considering a move to a larger, healthier, cheerier, serviced suburban rental I found on a nice larger wooded plot of land closer to her friends for her final months, years or hopefully a decade or two." Being closer to friends is an added value.

Later said "Value of her home is between $350,000-$400,000 at most, currently, but the area is on an upswing in terms of home values and rental prices. She’d rent it out. She can easily get $2500/mo for it. If she did, her gross monthly income would be $12520. Expenses: $8500 (or $15,500 with a $7k rental). So she’d only be eating up her assets at a rate of $3k/mo or $36k per year." If rental price of her new place goes up, presumably house price and the rent of her house would go up, so it is a good hedge.

[zeeke42]

It wasn’t her idea originally but having seen a few options I showed her, she is realizing there may be benefits to a healthier, more spacious and cheerier place. Her current house is very far from ideal and she can afford something nicer but still in tune with her values and lifestyle.

What makes a house healthier?

[Sandtrap]

Is your mom planning to sell her home when she moves to a rental? What is the value of the home?

At age 90, your mom can easily afford to spend $7k/month or much more given her assets.

Value of her home is between $350,000-$400,000 at most, currently, but the area is on an upswing in terms of home values and rental prices. She’d rent it out. She can easily get $2500/mo for it. If she did, her gross monthly income would be $12520. Expenses: $8500 (or $15,500 with a $7k rental). So she’d only be eating up her assets at a rate of $3k/mo or $36k per year.

2500/month "net" after all expenses and taxes is a poor return.
If gross rent and not net, even worse.

However, if the purpose is to hold the property strictly for tax advantages and property appreciation with no dependence on the net monthly "income", and disregarding regular and lumpy expenses, and tenant lawsuits, and vacancy rates with negative cash flow, then, keeping it and renting it out has a valid perspective.

j

[pennywise]

I would take her future needs into account by looking for an upscale assisted living near her friends, so she wouldn't have to move again if her health declines. Look for an open area (forest?) if you wish, but group activities and level floor throughout are needed. Do they offer music, art activities, and games? Do they drive the residents to shopping or community events (concerts, plays, movies, sports events)? Can the residents leave on their own (assuming she is capable to drive and return)? Do they take food preferences for the residents into account?

Being in group living will provide her with 24-7 care that she may eventually need and wouldn't have to move again. Since the caregivers work with all the residents, "sharing" them with other residents will cost a lot less than hiring a dedicated caregiver for one person.

This

Though it often is vehemently rejected by an aging parent, with the level of financial resources that OP’s mother has, she almost certainly at 90 years old would be very well served (as would her loving daughter) to move into one of the new generation of upscale retirement facilities that exist.

Often elderly folks from the greatest generation are adamantly opposed to going into “a home” based on outmoded ideas about what they are and how life there is managed.The reality is that with suffient financial resources life in today’s retirement/assisted living facilities is very much the equivalent of living a luxury country club lifestyle.

There are gourmet dining facilities, full housekeeping, health/safety monitoring, transportation to shopping and cultural outings and best of all seamless transitions for required care level upgrades without needing to move.

And of course, there is no more need for someone – usually an adult child or hired manager – to handle all of the financial details of managing a household for one elderly individual.

[TomatoTomahto]

Tapping into other assets to support soaring rent prices seems foolish. She can afford to own a home, why add rent risk into the mix?

Are you joking or just feeling exceptionally contrarian today? I really can't tell.

Why should today be any different to yesterday?

[Sandtrap]

Briefly: mom is 90, owns her extremely modest home in an MCOLA outright. She is considering a move to a larger, healthier, cheerier, serviced suburban rental I found on a nice larger wooded plot of land closer to her friends for her final months, years or hopefully a decade or two.

Here are her stats.

Portfolio:

$939k in CDs and HYSAs. All fixed income. No equities.

Other assets: $1.6 million in a residential real estate portfolio (w significant LTCG). A car worth approx $24,000.

Income:

$10,020/mo, consisting of pension, SS, interest and rental income

Debt: $0

Expenses: $8500/mo. $12,500 for a live in home health aide ($5500/mo is offset by LTCI on which 158k and 2.5 years coverage are remaining), so $7k mo out of pocket for the aide.

Remaining $1500/mo costs are cable, food, electricity, water, cable TV, pest control, real estate and income taxes, accountants fees, phone, dining out, household items, charitable donations, gifts, repairs, insurance, garbage collection, and medical (she’s on Medicare and they pay for most of her medical expenses).

How much can she pay for a rental ($5-6500/mo?) and should she spend down her cash first or sell one of her rentals. Or should she just stay put and hope her $ outlasts her? Thank you.

My thought is that she can pay up to $7,000 per month given her life expectancy, very slow rate of burning up her savings (actually she is even coming out ahead currently), and given her income. If she has a healthier home on the nice plot of land she might live longer.

A middle path with an exit plan might be an option.

Rent a "new" home and location. Try it out. See if she likes it.
Keep old home so there's an option to move back in right away. Don't move all of her things and empty the house, yet.

Consider it a "test" that's reversible.
j

[smitcat]

Is your mom planning to sell her home when she moves to a rental? What is the value of the home?

At age 90, your mom can easily afford to spend $7k/month or much more given her assets.

Value of her home is between $350,000-$400,000 at most, currently, but the area is on an upswing in terms of home values and rental prices. She’d rent it out. She can easily get $2500/mo for it. If she did, her gross monthly income would be $12520. Expenses: $8500 (or $15,500 with a $7k rental). So she’d only be eating up her assets at a rate of $3k/mo or $36k per year.

Rental income streams and choices.....
Who is or will be handling the rental liabilities and work now or in the future? How secure are those required rental resources to keep everything running well without generating extra work, anxiety and/or costs?

[Sandtrap]

I would take her future needs into account by looking for an upscale assisted living near her friends, so she wouldn't have to move again if her health declines. Look for an open area (forest?) if you wish, but group activities and level floor throughout are needed. Do they offer music, art activities, and games? Do they drive the residents to shopping or community events (concerts, plays, movies, sports events)? Can the residents leave on their own (assuming she is capable to drive and return)? Do they take food preferences for the residents into account?

Being in group living will provide her with 24-7 care that she may eventually need and wouldn't have to move again. Since the caregivers work with all the residents, "sharing" them with other residents will cost a lot less than hiring a dedicated caregiver for one person.

This

Though it often is vehemently rejected by an aging parent, with the level of financial resources that OP’s mother has, she almost certainly at 90 years old would be very well served (as would her loving daughter) to move into one of the new generation of upscale retirement facilities that exist.

Often elderly folks from the greatest generation are adamantly opposed to going into “a home” based on outmoded ideas about what they are and how life there is managed.The reality is that with suffient financial resources life in today’s retirement/assisted living facilities is very much the equivalent of living a luxury country club lifestyle.

There are gourmet dining facilities, full housekeeping, health/safety monitoring, transportation to shopping and cultural outings and best of all seamless transitions for required care level upgrades without needing to move.

And of course, there is no more need for someone – usually an adult child or hired manager – to handle all of the financial details of managing a household for one elderly individual.

+1
Excellent points.
Well said.

thanks
j

[SuzBanyan]

As others have noted, I would make sure that the there is no acceptable CCRC nearby that meets her needs before moving to a different SFH. It is possible, however, that she would not qualify for some CCRCs if she already is tapping into her LTCI.

Honestly, actual single family homes are usually the worst option for the elderly. By design, they are isolating due to that “large wooded lot.” I’m not sure what “serviced” means when talking about renting a SFH; would she have to care for the lot?

While others have talked about rent going up, another possibility is that the SFH will be sold. Could she afford to buy it if that were to happen? If not, she would need to move again, possibly not on a schedule of her choosing. The possibility of a 2nd move seems like a nightmare for someone already drawing on LTCI.

For her current home, I would guess that the tax consequences of selling it now or within 3 years would be minimal with the $250k gain exclusion. She already has other rental real estate that are illiquid due to high in bedded capital gains. She probably shouldn’t add to that part of her ledger.

Also, I note that her LTCI is paying $5500/month and that benefit will be exhausted in less than 2.5 years. At that point her expenses will exceed her income. Given her assets, she will still be fine (the rainy day she saved for will have come), but she may push back on continuing the level of caregivers when it is all on her own dime.

[WillRetire]

Annette, was it your mother whom you were describing in this thread?
viewtopic.php?t=422159

Relative is 90, has been diagnosed with mild to moderate Alzheimer’s, has congestive heart failure and atrial fibrillation.

Relocations can be very traumatic for the elderly who are frail, especially those who are suffering from dementia or alzheimers. Whatever you decide, consider how easy it will be to increase her level of care at her new residence.

Fortunately, her income and assets afford her many options.

A CCRC-type place would be ideal though I doubt they'd accept her into "independent living". She probably requires Assisted Living. The CCRC will do their own assessment and will advise.

[PeninsulaPerson]

Though it often is vehemently rejected by an aging parent, with the level of financial resources that OP’s mother has, she almost certainly at 90 years old would be very well served (as would her loving daughter) to move into one of the new generation of upscale retirement facilities that exist.

Often elderly folks from the greatest generation are adamantly opposed to going into “a home” based on outmoded ideas about what they are and how life there is managed.The reality is that with suffient financial resources life in today’s retirement/assisted living facilities is very much the equivalent of living a luxury country club lifestyle.

There are gourmet dining facilities, full housekeeping, health/safety monitoring, transportation to shopping and cultural outings and best of all seamless transitions for required care level upgrades without needing to move.

This is brilliantly and perfectly put.

Every word a gem.

Including the part about consideration for the "loving daughter."

We dealt with 2 parents who put up such a fight but finances forced their hands - thank God because within about 5 seconds they were both so relieved that the burden of the house was gone. And these two were "just" going to senior housing, not a nice CCRC!

[PeninsulaPerson]

It wasn’t her idea originally but having seen a few options I showed her, she is realizing there may be benefits to a healthier, more spacious and cheerier place. Her current house is very far from ideal and she can afford something nicer but still in tune with her values and lifestyle.

What makes a house healthier?

Good systems all working, no mold, no pests, safe access - wheelchair accessible, a safe location, quiet, no major repairs needed, electrical system modern and up to code, a million things that older houses need and often older owners have ignored for years!

[PeninsulaPerson]

Briefly: mom is 90 ...

... $12,500 for a live in home health aide ...

She's already sort of beyond SFH if it's only the aide who's making that possible.

Ironically your Mom might like a CCRC because she wouldn't have to have the aide always there - more age- and capability-appropriate independence for her.

Plus, sadly, she isn't getting younger. Acting now could make the next few years much happier and healthier for your mother, and easier for you, AL.

[Watty]

Can Reasonably Well Off Elderly Mom Afford A Nicer Home?
.....
mom is 90
.....
$939k in CDs and HYSAs.

Yes.

There are lots of details but you are overthinking this.

[exodusNH]

Is your mom planning to sell her home when she moves to a rental? What is the value of the home?

At age 90, your mom can easily afford to spend $7k/month or much more given her assets.

Value of her home is between $350,000-$400,000 at most, currently, but the area is on an upswing in terms of home values and rental prices. She’d rent it out. She can easily get $2500/mo for it. If she did, her gross monthly income would be $12520. Expenses: $8500 (or $15,500 with a $7k rental). So she’d only be eating up her assets at a rate of $3k/mo or $36k per year.

A 90 year old person should not rent out the home.

Sell it. She gets $250,000 of tax free gains. She's not complicating her life with depreciation and then the inevitable depreciation recapture.

She's unlikely to live 10 years. That's $40,000 per year of tax-free spending

[Watty]

Other assets: $1.6 million in a residential real estate portfolio (w significant LTCG).
......
Value of her home is between $350,000-$400,000 at most, currently, but the area is on an upswing in terms of home values and rental prices. She’d rent it out. She can easily get $2500/mo for it. If she did, her gross monthly income would be $12520. Expenses: $8500 (or $15,500 with a $7k rental). So she’d only be eating up her assets at a rate of $3k/mo or $36k per year.

I an not a real estate guru but there is a rule of thumb that the rent should be 1% of the homes value to be a good rental. This does not sound even close.

Most housing markets are still strong and she can likely easily sell it now and get the homeowners capital gains exemption.

She already has a large percentage of her net worth in real estate and if she keeps this as a rental it would mean that she has about $2 million in investment property. Even if it had good numbers she does not need more investment property.

After she passes you would also need to deal with selling it possibly in a bad housing market and there could be 11 months left on a lease.

I do not recall how old you are but if she is 90 then you are likely not all that young yourself so that you could be dealing with this house when you are in your 70s. It might not be likely but there is a realistic chance that she could outlive you which would make managing her finances and estate even harder. Anything you can do to simplify her finances would be good.

Keeping it as a rental makes no sense, it is not even close.

If she has lived there decades even after her stuff is cleaned out of the house there will likely be significant time and money needed to refurbish the house to get it ready to rent. If it is sold then depending on your local housing market it might not require a lot of work.

[ZWorkLess]

She should sell her current home for a big tax free cash infusion. If she clears $300k, that right there is enough to cover $7-10k rent for several years. I’d spend that down first.

Spend it spend it spend it! Help her enjoy every minute!

[TN_Boy]

She is considering a move to a larger, healthier, cheerier, serviced suburban rental I found on a nice larger wooded plot of land ...

It's good that it's something she might want.

Sounds like she can afford it and has multiple ways to pay for it.

She's lucky to have you to help her figure it out.

My only consideration is that moving is enough of a chore that perhaps a CCRC would be better overall. Saves her the money on an aide and they are prepared for older people in so many lovely ways. Many around here are outside of town centers in particularly woody locations.

Where do her older friends live now? Any in a local CCRC?

I doubt a CCRC would save the money on the aide. Apparently mom has a person in the house 24x7, solely to help her? OP am I correct?

No facility -- CCRC, skilled nursing, anything -- will dedicate staff exclusively to one person. Even a good group home is going to be maybe 1 staff to 3 or 4 patients. Thus as I understand the current living arrangement, anything without 24 hour support is a step down in personal care help.

[TN_Boy]

Tapping into other assets to support soaring rent prices seems foolish. She can afford to own a home, why add rent risk into the mix?

Are you joking or just feeling exceptionally contrarian today? I really can't tell.

In any case, while you may worry about "soaring" rent prices, house purchase prices have not exactly been left behind. She might benefit from a nicer home, she has an actuarial lifespan of 4.65 years and is already in LTC (at home) and is extremely unlikely to still be living in a private residence 10 years from now. She has assets to easily support that even if the rent triples. How much would this nicer house cost to purchase? Add in the non-negligible burden of home ownership on a disabled 90-year old and I think this is all pretty easy to figure out. I only suggested the SPIA to point out that she could trade the modest home for a guaranteed income stream that would cover most of her rent indefinitely. Her situation works out fine without it as well.

Purchasing it is not a cost, as you can get the equity back out. Rent however is money flushed down the toilet.
Yes I'm contrarian on this point, because I listened to the Boglehead line on renting and got bit badly by it. So I put out the other side of the story to combat the group think.
If she is so bad off as described then realistically there is little value added by having a nicer home, so staying put seems like a reasonable option.

C'mon. Mom is 90. If renting is the best option to make her life better, rent. It appears she can afford it. My only concern about renting would be what if the owner sells the house and mom is forced to move out of the rented house.

[TN_Boy]

Paying for anything is not a problem for her. I recommend selling not only her house, but one rental a year to spread out the capital gains (unless you are looking for a step-up in value when she dies).

I would take her future needs into account by looking for an upscale assisted living near her friends, so she wouldn't have to move again if her health declines. Look for an open area (forest?) if you wish, but group activities and level floor throughout are needed. Do they offer music, art activities, and games? Do they drive the residents to shopping or community events (concerts, plays, movies, sports events)? Can the residents leave on their own (assuming she is capable to drive and return)? Do they take food preferences for the residents into account?

Being in group living will provide her with 24-7 care that she may eventually need and wouldn't have to move again. Since the caregivers work with all the residents, "sharing" them with other residents will cost a lot less than hiring a dedicated caregiver for one person.

I like the idea of starting to sell the properties in a managed way. She should have enormous federal tax deductions (due to the cost of the aide, plus all other medical costs) so perhaps the capital gains hit can be minimal to nothing with careful selling. This also simplifies life for the heirs, unless they wanted to keep the rental properties.

[TN_Boy]

If she spends the $400k that she'd get from selling her home and bought an SPIA, the income would be about $6k/month guaranteed for life. That would pay the rent indefinitely and would take almost all the uncertainty out of a situation that really doesn't have much in the first place.

Given there is plenty of money anyway, an SPIA seems like a bad bet at her age.

[TN_Boy]

Can Reasonably Well Off Elderly Mom Afford A Nicer Home?
.....
mom is 90
.....
$939k in CDs and HYSAs.

Yes.

There are lots of details but you are overthinking this.

At a high level, this is absolutely the correct answer

[AnnetteLouisan]

Paying for anything is not a problem for her. I recommend selling not only her house, but one rental a year to spread out the capital gains (unless you are looking for a step-up in value when she dies).

I would take her future needs into account by looking for an upscale assisted living near her friends, so she wouldn't have to move again if her health declines. Look for an open area (forest?) if you wish, but group activities and level floor throughout are needed. Do they offer music, art activities, and games? Do they drive the residents to shopping or community events (concerts, plays, movies, sports events)? Can the residents leave on their own (assuming she is capable to drive and return)? Do they take food preferences for the residents into account?

Being in group living will provide her with 24-7 care that she may eventually need and wouldn't have to move again. Since the caregivers work with all the residents, "sharing" them with other residents will cost a lot less than hiring a dedicated caregiver for one person.

I like the idea of starting to sell the properties in a managed way. She should have enormous federal tax deductions (due to the cost of the aide, plus all other medical costs) so perhaps the capital gains hit can be minimal to nothing with careful selling. This also simplifies life for the heirs, unless they wanted to keep the rental properties.

Oh can she deduct the cost of the aide? As a medical expense or as a dependent? Would it be net of the LTCI offset or gross?

[TN_Boy]

Annette, was it your mother whom you were describing in this thread?
viewtopic.php?t=422159

Relative is 90, has been diagnosed with mild to moderate Alzheimer’s, has congestive heart failure and atrial fibrillation.

Relocations can be very traumatic for the elderly who are frail, especially those who are suffering from dementia or alzheimers. Whatever you decide, consider how easy it will be to increase her level of care at her new residence.

Fortunately, her income and assets afford her many options.

A CCRC-type place would be ideal though I doubt they'd accept her into "independent living". She probably requires Assisted Living. The CCRC will do their own assessment and will advise.

That's a good point. The CCRCs I am familiar with would not take her.

[TN_Boy]

Paying for anything is not a problem for her. I recommend selling not only her house, but one rental a year to spread out the capital gains (unless you are looking for a step-up in value when she dies).

I would take her future needs into account by looking for an upscale assisted living near her friends, so she wouldn't have to move again if her health declines. Look for an open area (forest?) if you wish, but group activities and level floor throughout are needed. Do they offer music, art activities, and games? Do they drive the residents to shopping or community events (concerts, plays, movies, sports events)? Can the residents leave on their own (assuming she is capable to drive and return)? Do they take food preferences for the residents into account?

Being in group living will provide her with 24-7 care that she may eventually need and wouldn't have to move again. Since the caregivers work with all the residents, "sharing" them with other residents will cost a lot less than hiring a dedicated caregiver for one person.

I like the idea of starting to sell the properties in a managed way. She should have enormous federal tax deductions (due to the cost of the aide, plus all other medical costs) so perhaps the capital gains hit can be minimal to nothing with careful selling. This also simplifies life for the heirs, unless they wanted to keep the rental properties.

Oh can she deduct the cost of the aide? As a medical expense or as a dependent? Would it be net of the LTCI offset or gross?

Does she need help with two or more ADLs and/or have dementia per a doctor's diagnosis?

See https://www.irs.gov/publications/p502 the section on LTC. In general, I'd think she can deduct that. Or rather, the portion not covered by LTCi (eg if total medical costs 100k -- LTC, drug copays, etc etc -- and LTCi pays 60k, the potential deduction is 40k less the 7.5% thing). The IRS requirements for a medical deduction and triggering LTCi are generally the same.

[PeninsulaPerson]

I doubt a CCRC would save the money on the aide. Apparently mom has a person in the house 24x7, solely to help her? OP am I correct?

No facility -- CCRC, skilled nursing, anything -- will dedicate staff exclusively to one person. Even a good group home is going to be maybe 1 staff to 3 or 4 patients. Thus as I understand the current living arrangement, anything without 24 hour support is a step down in personal care help.

Maybe the mom could still have an aide come in - an aide of her own.

Maybe she only needs the aide 24-7 because of the current SFH set-up.

As was said upthread, a lot depends!

The main point being that no SFH might be right for the OP's mother much longer and acting proactively could be a blessing to all!

[exodusNH]

If she spends the $400k that she'd get from selling her home and bought an SPIA, the income would be about $6k/month guaranteed for life. That would pay the rent indefinitely and would take almost all the uncertainty out of a situation that really doesn't have much in the first place.

What happens if the rent goes up 40% in a two year time span? Hmm? Rent is dangerous, and an annuity of all things is not the way to remove that risk.

I suppose she would need to tap into the $2.5 million in other assets she has. There is no realistic way that she will run out of money. She should use her assets to obtain the best living situation she can, and if that is a rental it is just fine.

Not running out of money is always the wrong goal. The goal should be to not deplete assets to the degree that becomes worry inducing. Watching your retirement funds dwindle in old age is a source of significant anxiety and undue stress. Its not enough to still have $10k in the bank when you die, because for years before that you will be worried about not having enough. Not only that, but its not desirable to squander all of the money that would otherwise go to the heirs.

Tapping into other assets to support soaring rent prices seems foolish. She can afford to own a home, why add rent risk into the mix?

The woman is 90 years old. She will not run out of assets before she runs out of time.

[bd7]

Given there is plenty of money anyway, an SPIA seems like a bad bet at her age.

There are different ways to structure SPIAs so that they aren't "bad bets" and still give you some longevity insurance. You have to look at an SPIA calculator like immediateannuities.com. A "Life plus 10 years Certain" policy returns 12% on the premium and is guaranteed to pay out 120% in total.

[exodusNH]

Tapping into other assets to support soaring rent prices seems foolish. She can afford to own a home, why add rent risk into the mix?

Are you joking or just feeling exceptionally contrarian today? I really can't tell.

In any case, while you may worry about "soaring" rent prices, house purchase prices have not exactly been left behind. She might benefit from a nicer home, she has an actuarial lifespan of 4.65 years and is already in LTC (at home) and is extremely unlikely to still be living in a private residence 10 years from now. She has assets to easily support that even if the rent triples. How much would this nicer house cost to purchase? Add in the non-negligible burden of home ownership on a disabled 90-year old and I think this is all pretty easy to figure out. I only suggested the SPIA to point out that she could trade the modest home for a guaranteed income stream that would cover most of her rent indefinitely. Her situation works out fine without it as well.

Purchasing it is not a cost, as you can get the equity back out. Rent however is money flushed down the toilet.
Yes I'm contrarian on this point, because I listened to the Boglehead line on renting and got bit badly by it. So I put out the other side of the story to combat the group think.
If she is so bad off as described then realistically there is little value added by having a nicer home, so staying put seems like a reasonable option.

Your one bad experience with renting doesn't mean renting is a bad idea.

I bought my house in 2005. It wasn't until 2020 that my house had the same nominal value as when I bought it. This doesn't imply that owning a house is a terrible idea.

The equity you tie up in a house is an opportunity cost. Long-term appreciation of a house is generally only a point or so above inflation. Worse, you can't even spend it in any reasonable way. It's dead money.