The Financial Costs Of Moving Home
By JP Adams
Many family caregivers consider moving close to a loved one or parent as they become older. There they can help with cleaning, getting groceries, and driving to doctors’ appointments. Most importantly, this gives them and their loved ones an opportunity to connect.
At the same time, the decision to move home can be challenging. I often hear mixed feelings from families – “I’m not sure if it’s something I want to do,” OR “I want to be with her but I don’t really like the area where she lives.”
One thing is overwhelmingly clear. Moving home is a significant financial decision. There are costs and benefits. It’s important to go through each and make a rational decision.
Moving home is also a highly personal choice. In this post I will walk through the major financial elements you should consider to see if this is a practical decision for you. Before you immediately jump also consider how you can help from a distance. For example, look at technologies that can keep you on contact with your loved one.
In this post I would like to help you with the information you need. I want you to feel that you know the costs before you make a decision. I want you to feel fully prepared for this potentially large transition.
The Financial Benefits of Moving Home
There are several benefits to moving home with a loved one. In some respects costs can go down and savings go up if you’re around to lend a hand and run errands.
- Lower Cost Of Living
Your home living expenses will go down if you choose to cohabitate with your loved. Instead of two separate rents or mortgages you will have one, and utilities like electricity, gas and water will also be shared. This can save $15,000 to $50,000 a year depending upon where you live.
Sometimes family caregivers eliminate the need to pay rent entirely, such as when the loved one has already paid off their mortgage and the family caregiver sells their home as part of the move.
Even if you decide not to move into the same home, you may still save money if your loved one lives someplace where the overall cost of living is less than where you live. This can cut a large part of your fixed costs.
- Caregiver Expenses
Hiring at-home help is a significant cost. The cost of at-home care in Bloomington, Illinois, for example, is nearly $50,000 a year. And by moving home you might also avoid the cost of sending your loved one to an assisted living facility or nursing home, which are over $50,000 and $70,000 respectively in Bloomington.
These outside caregiver costs are measurable, and many families can’t afford them. As a result, families move in with each other.
To find out costs in your state or area click here.
- Claiming Your Loved One As A Dependent On Your Taxes
If you cover more than 50% of your parent’s expenses in a year you can claim them as a dependent on your taxes. This can have a large impact.
The support you provide (hypothetical rent of the room if they weren’t there already, food, utilities, and medical expenses) must be at least $1 above their income from social security and other retirement vehicles.
The catch is that your loved one’s gross income must be below $3,650. However this number does not include social security or tax-exempt pensions. It does include interest from a bank account, capital gains, sales of stock or other passive income (e.g., income from a rental property).
The Financial Costs of Moving Home
The actual costs of moving home can be significant. Before you pull the trigger make sure you think through these scenarios closely, because they may offset any savings that you gain.
- Lost Income
You may need to find new work. In your current city you have professional connections, multiple employers in your industry, and job opportunities. You may not have any of those in your new city, so be clear with yourself why you are making the move. It’s not because you were offered a fantastic job opportunity.
Look at the average salaries for jobs in your loved one’s area. Identify the top employer in the city. Does anyone from your industry work there now?
Determine two things. First, what percent decrease in salary are you facing and willing to accept? Define the dollar amount and multiply it by the number of years you are expecting to be there.
If you plan on cutting back on hours to care for your loved one, the costs are even more significant. According to Met Life you could lose $90,000 to $143,000 in income per year if you leave the workforce entirely.
- Lost Savings
In your current job you are likely able to save some money, because you know what your rent, food, clothes and entertainment bills are each month.
It’s unclear if you will have that 5% – 15% savings after the move. You may need to take a pay cut, so any money left over often gets eaten up. Even trips to the grocery store, gas for countless doctor’s visits and small items at the drug store add up, and over several years this can total thousands of dollars. It can also have a real impact on your own retirement, ability to travel and to give to charity.
- Decreased Retirement Gains
Met Life says that those who cut back on hours to help a loved one at home lose on average $145,000 in lost social security benefits and $50,000 in private pension losses over a lifetime. A $195,000 impact on your own retirement can far exceed income losses. If you’re reaching retirement yourself this is a critical, meaning your last years of contributing to your retirement must be aggressive.
In my mind this is the single most important category to consider. Many boomers already were not able to save enough for retirement. Don’t pull back on making up for lost retirement years. You need to do it.
One way to offset these costs is to become a paid at-home caregiver. This may be particularly helpful if down the road you may become your loved one’s full-time caregiver. Read here for strategies on how to get paid.
- Increased Medical Expenses
Moving home can increase your stress level. Trips to the grocery store, multiple doctor’s visits a week, and picking up medications at the local drug store can take its toll after several months.
Caregiving can also significantly decreases free time that might otherwise be used to relieve stress. It’s harder to find time to exercise and participate in personal hobbies like painting, heading out for a movie with friends, or going out to a nice meal with a romantic partner.
Increased stress, decreased sleep and infrequent exercise can increase your own visits to the doctor and need for medical services. In challenging situations, caregiving can also decrease your own overall lifespan due to the health issues that arise.
The Emotional Costs & Benefits of Moving Home
The focus of this article has been on the financial implications of moving home, however the emotional costs and benefits are equally or more important.
Personal goals to write a novel may have to put aside, but the opportunity to rebuild a damaged relationship with your mother arises. A romantic relationship might need to come to an end, but new hobbies of sculpting and woodworking could emerge.
NIH covers some of the financial impacts of becoming a caregiver there are quotes from family caregivers. A few include:
Costs of Moving Home:
“I have postponed marriage as a result of caregiving.”
“I am using all of my vacation and paid leave to provide care…If I wasn’t caregiving, I would like to go on a vacation.”
“I know I do not have a choice and must accept my role at this time…I am not able to be involved in church, which was a very important part of my life…and I cannot take my morning bike ride with others in the neighborhood…I am a private pilot, and my plane sits in the hangar.”
Benefits of Moving Home:
“I don’t give up anything I wanted to do, because we just go together wherever we want — we get along great.”
“[I] quit my job to move back [to my childhood home] to help with my father…[I made this decision] because I know my time with them is limited and the time I spend with them is quality time.”
About the Author
John Patrick (JP) Adams is the founder of Caregiver Finances, a financial advice site for family caregivers. Caregiver Finances aims to maximize family finances, enable caregivers to regain control of their retirement and promote compassionate family connection through wise financial planning.
In His Words: “I lost both of my Grandfathers and an Uncle to disease late in life. I learned most from watching their wives, my mother and extended family members during this time. Their compassion and self-sacrifice was astounding. Caregivers are heroes in my book.
Finances are an emotionally charged part of caregiving that many people want to avoid. That’s where I come in. I love helping people with their finances. I particularly love taking complex financial topics and boiling them down to their basic elements. Simple actionable advice is king in my book.“
Editor’s Perspective
When telling the story of what inspired me to start Modern Health Talk, I often describe the path I took into technology and how IBM influenced my perspective, as well as the source of my interests in health and consumer advocacy, what I learned from my parents’ final years, and some of my biggest disappointments.
My purpose here at Modern Health Talk has been to help seniors stay safe, healthy and independent in their own homes as long as possible, thus avoiding the high cost of institutional care and the burden on family caregivers, because that’s what over 90% of them want.
What allows me to do this with no advertising or resulting revenue is the fact that I was able to retire from IBM with a full pension, receive Social Security benefits, and am married to a lovely registered nurse wife who now is also on Social Security. We’ve downsized our home and lifestyle to make ends meet.
