Peter Sachs, Newton Architect, Mother in Law addition,

When an Addition Makes More Sense Than Assisted Living for Aging Parents

Peter Sachs, Newton Architect, Mother in Law addition,

Peter Sachs’ addition to his house for his aging mother after she suffered from a mild stroke got me thinking. When does a home renovation to include space for an aging parent make more sense than Assisted Living? I decided to research.

It turns out that many health insurance policies provide a daily allowance towards home health care providers for things like physical therapy, medication administration, and assistance with bathing or showering. Peter Sachs mother gets $240/day from her policy. While this is not enough for 24 hour care, this is perfect for parents who might need Assisted Living but value their independence.

Peter Sachs’ renovation for a 750 square foot “mother-in-law” suite cost $180,000, however, his home equity increased by $300,000 over the last two years.

Using a mortgage amortization schedule calculator (30 years fixed, 5%), this is $966.28 for Monthly Principal & Interest.

I then researched the monthly cost for  Assisted Living.

“Just as the cost of real estate varies by geographic area, assisted living costs also vary nationwide. According to a 2011 MetLife Mature Market Study, the national average for assisted living base rates is $3,477 per month. In 2010, the average base rate was $3,293, which represents an increase of 5.6% year-over-year. Residents of assisted living communities can typically expect a 3-5% annual increase in their base rate.” from Senior Homes

The average cost in Massachusetts is $4,950.

There are other factors to consider besides when you move in your parents or in-laws such as: PrivacySocializing ,  Decline in Mobility, and Decline in Health. If you decide to explore a renovation, your plan can and should include solutions to these issues. For Peter Sachs‘ renovation, his design for an extra wide stairway will allow for a mobile chair and the bathroom can easily accommodate a wheelchair.

What are your issues and solutions for your aging parents? Please share!

Comments
8 Responses to “When an Addition Makes More Sense Than Assisted Living for Aging Parents”
  1. Vani Sayeed says:

    Mia, very informative thanks for sharing!

  2. Larry says:

    I had this situation personally. My mother had a series of strokes over the years and eventually couldn’t care for herself. She went to a nursing facility but hated it (she was fine mentally). In order to get assistance with care costs she only had one choice – sell her existing small home, and use the proceeds to add on to one of her children’s homes – either mine or my brother’s. In the end my mother made the decision – she chose my brother’s place because in Newton, we have no land to add onto (yes there actually are small homes in Newton). My brother was much further out and had some space on his lot, and also his wife didn’t work so she was home if my mother needed someone. Aides were then able to come in for several hours a day to help with feeding, changing, etc. So she got to be in a nice place, living right next to family, had some help, grandchildren next door, and it was much better than a nursing home. Financially it cost most of what she had, but a nursing home would have been worse. And giving up her assets meant that some costs would be covered for the aides from Medicare. And here she lived for 4 years until she died last month. For her it made sense without a doubt.

    If you do this however, there are some things to think about and one thing is to make sure your parent updates their will. Although the parent may have previously wanted his/her assets split equally among children, if you followed this path, the ‘betterment’ to the home is now owned by the sibling whose house was added on to. At first I thought this was fair. They take on an additional burden of care, and I figured ok , her remaining years will be happy and then my sibling will get to keep the addition and the increased property value. He also will have higher taxes and repair costs. Seemed like a reasonable swap to me. But I wasn’t thinking about what would happen when she died. After she did die, my assumption was still that my sibling would just get the extra space, but there was something that never crossed my mind. Rental. And I’m sure it never crossed my mother’s mind either. If the sibling decides to rent additional space, say they get $1500/mo for the next twenty years, forgetting about inflation. Suddenly this ‘extra space’ throws off $1500 x 12 months x 20 years is $300,000. Subtract expenses like extra taxes and repair and you still have a chunk of change. But now, even though your parent may have originally wanted their assets split equally, this income stream becomes 100% the asset of the sibling who took the parent in, and of course the extra property is theirs as well. So….if that is not the intent of parent, make sure to clarify it in the will!!

    (I am not an attorney, and this is just my opinion)

    • Pragmatic Mom says:

      To Larry,
      That’s a good point that the addition also has income potential. In the case of Peter Sachs, he paid for the addition himself (plus he’s an only child) so issues of inheritance didn’t come up. I can see how a future income stream can be an issue particularly if the period in which he or she lives in the new addition is relatively short. Of course, with the extra space and income, the person gets increased property tax, property insurance, maintenance/upkeep costs, plus the additional headache of being a landlord so there are costs as well.

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