Aging in Place: Facilitating Choice, Cost Savings and Independence

Highlights

• Evidence suggests that programs that support aging in place may yield cost savings for families, government, and health systems.
• More extensive research is needed to better account for all costs involved, because existing evidence often relies on small-scale case studies.
• Aging in place has also been shown to have health and emotional benefits over institutional care.

With the United States’ ongoing demographic shift toward an increasingly older population, along with the fact that 89 percent of Americans over age 50 wish to remain in their homes for as long as possible, conversations about the benefits and costs associated with aging in place will become increasingly critical. Recent research on home-based health programs suggests that aging in place can yield potential cost savings at the individual, state, and federal levels. Although the current body of research is limited, these studies demonstrate the benefits of aging in place — benefits that extend beyond cost savings to include social and emotional benefits to both seniors and the broader community.

Individual Cost Savings

Nursing home expenditures are more than three times those of non-institutional long-term care services, and approximately one-fifth of nursing home bills are paid out of pocket. The choice to either age in place or enter institutional care is a complex and deeply personal decision that hinges on factors such as the amount of health care needed and the availability of family or paid home assistance. However, one reason most older adults choose to age in place for as long as they are able is simply because doing so is the most economical option. Some older people — 21% of those aged 65 to 74 and 18% of those aged 74 to 84 — own their homes outright and thus no longer have mortgage expenses.

Even when seniors are ready to move, selling their homes can be difficult. Their homes tend to be older and are less likely to have been updated, making them less desirable to potential buyers, especially in a slow housing market. A 2008 survey from the American Seniors Housing Association found that approximately 25% of seniors have not improved their homes in 10 years, and 41% say they won’t spend money to attract a buyer. These findings are in contrast with the 57% of all homeowners who made home improvements in the 3-year period from 2009 to 2011.

High nursing home costs mean that aging in place could yield significant cost savings for the elderly. From 2004 to 2007, in 2009 dollars, the median monthly payment for non-institutional long-term care was $928 compared with $5,243 for nursing homes. Expenditures for nursing homes are more than three times those for non-institutional long-term care services, and these rates are continuing to rise. Between 2011 and 2012, the average daily rate for a private room rose 3.8%, which exceeded the rate of inflation. Approximately one-fifth of nursing home bills are paid either primarily or entirely out of pocket. In 2009, 94% of people aged 65 and older paid for health care out of pocket. Out-of-pocket spending is much greater for institutional than for non-institutional services. For example, among those who needed assistance with activities of daily living, out-of-pocket expenses were $554 and $1,065 in 2009 dollars for non-institutional and institutional services, respectively.

The statistics mentioned above are available through the U.S. Department of Housing and Urban Development.

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