How to Calculate the Cost of a Retirement Home

Co-authored by Hannah Madden

Last Updated: September 25, 2021 References

Planning for retirement is exciting, but it can also be a little stressful. Moving into a retirement home can give you social opportunities and daily help with tasks that you wouldn’t have living on your own. If you’re thinking about moving into a retirement home, keep reading to learn how much you should set aside and how, exactly, to cover those costs.

Method 1

Method 1 of 2:
Average Costs

1
Choose your level of care. In a retirement home, the more care you need, the more expensive it will be. In general, a low monthly fee will get you meals, assistance with housework, and access to social opportunities. If you need any medical care, your fee may get higher, especially if it’s round-the-clock.^{[1]
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- Retirement home costs can also vary by location. A more expensive area will probably have more expensive retirement homes.
- If you do end up needing round-the-clock care, you will probably be moved to a nursing home. Nursing homes are usually more expensive than retirement homes because they provide full-time medical care.
2
Set aside a few thousand dollars for an entrance fee. Most retirement homes have an entrance fee for all residents before you can start living there. The entrance fee varies greatly, but it’s usually around $1,600 on the low-end. On the high-end, it can get up to 6 figures, but that’s usually for private facilities where you wouldn’t have to pay for any other additional costs afterward.^{[2]
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- If you’re curious about the exact fees in your area, feel free to call up retirement communities and chat with the person in charge. They can let you know just how much they charge their residents up front.
3
Pick out the type of room you’d like. Many retirement homes have different price points for various rooms. Smaller rooms that are more like apartments are usually cheaper, while larger rooms or even condos cost more.^{[3]
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Research source} The type of room you get may also depend on the level of care you need, so it’s worth factoring that in.
- Room prices vary greatly from retirement home to retirement home. For a more accurate cost, talk to the head of your local retirement home.
4
Prepare for a monthly fee between $1,500 to $6,500. In retirement homes, you’ll pay a monthly fee, kind of like paying rent. This cost usually covers food, amenities, utilities, and activities. In general, you’ll want to set aside a few thousand dollars per month to cover the cost of living in a retirement home.^{[4]
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- Other services, like medication, housekeeping, and laundry, usually cost extra. If you want to crunch some numbers, look up a free retirement home calculator online.
- On average, people usually pay around $48,000 per year to live in a retirement home.
5
Take your average lifespan into account. Although you’ll never know for sure, your average lifespan greatly affects how much money you’ll need to budget for retirement. In the U.S., the average lifespan is 78 years old, but you may live even longer. Try to take your family history into account, too—if your grandparents lived to be over 100, you might live longer than the average person.^{[5]
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Trustworthy Source
US Social Security Administration
Independent U.S. government agency that administers Social Security and related information
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- For a more in-depth look at your lifespan expectancy, visit https://www.ssa.gov/oact/STATS/table4c6.html.

Method 2

Method 2 of 2:
Additional Income

1
Look into your state’s Medicaid program to see what they cover. This is an important part of figuring out your retirement home budget. If you are eligible, you can apply to Medicaid and get some of your care costs waived or paid for. Every state’s Medicaid is slightly different, so you should look into the state you plan to retire in for more information.^{[6]
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- Medicaid is different from Medicare. Medicare acts like health insurance, but it doesn’t cover any long-term care. Medicaid is made specifically for low-income adults and elderly people struggling to pay healthcare bills.
2
Apply for social security benefits. If you’ve been paying your taxes, you’re eligible to receive social security benefits at the age of 62. Once you retire and you aren’t working anymore, you can apply for these benefits to receive a fixed income every month. Social security benefits increase every year with inflation, and the amount you receive is dependent upon your yearly salary and how old you are.^{[7]
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Trustworthy Source
USA.GOV
Official website for the United States federal government
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- To calculate your estimated social security benefits, visit https://www.ssa.gov/OACT/quickcalc/.
3
Look for state-run financial assistance. Many states have their own, individual programs that can help you pay for housing or medical costs. If you’re nearing retirement age and you want to see what you qualify for, head to https://www.benefits.gov/categories/Financial%20Assistance and input your state and your relevant categories. This site will tell you where you can sign up for financial assistance if you need it.^{[8]
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4
Get a life insurance policy with living benefits. Living benefits, also called accelerated benefits, can be given to you while you’re still alive if you qualify for them. If your life insurance policy has these benefits, you can use them to pay for long-term care or medical care after the diagnosis of a terminal illness. Talk to your insurance provider to see if you can sign up for these benefits today.^{[9]
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- The amount you receive depends on your policy and your financial situation.
5
Apply for Veterans Aid if you’re a veteran. If you’re a veteran, you can receive up to $1,794 per month after you retire. If you’re a surviving spouse of a veteran, you can receive up to $1,153 per month, and a couple can receive up to $2,127 per month. You can use this money to help cover the costs of your retirement home after you move in.^{[10]
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- To learn more about Veterans Aid, visit https://www.va.gov/pension/aid-attendance-housebound/.