Learning how to plan for retirement at home starts with one simple truth: most people want to stay in their own space as they age. A 2021 AARP survey found that 77% of adults aged 50 and older prefer to remain in their current homes throughout retirement. This preference makes sense. Familiar surroundings provide comfort, community ties stay intact, and monthly housing costs become predictable.
But staying home during retirement requires preparation. Financial readiness, clear goals, smart savings choices, and practical home modifications all play a role. This guide breaks down each step so readers can build a retirement plan that keeps them exactly where they want to be.
Key Takeaways
- 77% of adults aged 50+ prefer to stay in their current home for retirement, making early planning essential.
- Calculate your net worth and compare projected retirement income against expenses to identify financial gaps.
- Maximize employer 401(k) matches and diversify savings across IRAs and taxable accounts to build retirement security.
- Set measurable savings targets based on replacing 70-80% of your pre-retirement income annually.
- Prepare your home for aging in place by adding accessibility features like grab bars, wider doorways, and main-floor living options.
- Budget 1-2% of your home’s value annually for maintenance and research future care services to avoid unexpected costs.
Assessing Your Current Financial Situation
Before anyone can plan for retirement at home, they need a clear picture of where they stand financially. This means gathering numbers, real ones, not estimates.
Calculate Net Worth
Net worth equals total assets minus total debts. Assets include savings accounts, investment portfolios, real estate equity, and retirement accounts like 401(k)s and IRAs. Debts cover mortgages, car loans, credit card balances, and any other outstanding obligations.
A positive net worth signals progress. A negative one highlights areas needing attention before retirement arrives.
Review Monthly Income and Expenses
Tracking spending reveals patterns. Many people underestimate how much they spend on dining out, subscriptions, or impulse purchases. A three-month expense audit provides accurate data.
On the income side, current salary matters less than projected retirement income. Social Security benefits, pension payments, and expected investment withdrawals form the foundation of retirement income. The Social Security Administration offers online calculators to estimate future benefits based on work history.
Identify Gaps
Compare projected retirement income against expected expenses. If expenses exceed income, adjustments become necessary. Options include reducing spending, increasing savings rates, or planning to work part-time during early retirement years.
This financial assessment creates the baseline for all retirement planning decisions. Without accurate numbers, planning for retirement at home becomes guesswork.
Setting Clear Retirement Goals
Goals give retirement plans direction. Vague intentions like “save more” rarely produce results. Specific targets create accountability.
Define the Retirement Timeline
When does retirement begin? At 62, someone can claim reduced Social Security benefits. At 67, full benefits kick in for those born after 1960. Delaying until 70 increases monthly payments by about 8% per year.
The timeline affects everything. Someone planning to retire in five years faces different priorities than someone with twenty years ahead.
Determine Lifestyle Expectations
Retirement at home looks different for everyone. Some people envision quiet days with gardening and grandchildren. Others want to travel frequently or pursue expensive hobbies.
Lifestyle choices drive budget requirements. Travel-heavy retirements cost more than stay-at-home ones. Healthcare needs increase with age, often unpredictably. Fidelity estimates that a 65-year-old couple retiring in 2023 will need approximately $315,000 for healthcare expenses throughout retirement.
Set Measurable Savings Targets
Financial advisors often recommend replacing 70-80% of pre-retirement income annually. A household earning $100,000 per year would aim for $70,000 to $80,000 in annual retirement income.
Working backward from this target reveals required savings. Online retirement calculators help estimate how much to save monthly to reach specific goals. These tools account for expected investment returns, inflation, and time horizons.
Clear goals transform abstract retirement planning into concrete action steps.
Building a Diversified Savings Strategy
A single savings account won’t fund a comfortable retirement. Diversification spreads risk and maximizes growth potential.
Maximize Employer-Sponsored Plans
For employees with access to 401(k) plans, contributing at least enough to capture the full employer match represents free money. In 2024, contribution limits sit at $23,000 for those under 50 and $30,500 for those 50 and older.
These accounts offer tax advantages. Traditional 401(k) contributions reduce taxable income now. Roth 401(k) contributions grow tax-free.
Open Individual Retirement Accounts
IRAs supplement workplace plans. Traditional IRAs may provide tax deductions on contributions. Roth IRAs offer tax-free withdrawals in retirement. The 2024 contribution limit is $7,000, with an additional $1,000 catch-up contribution for those 50 and older.
Income limits apply to Roth IRA contributions and traditional IRA deductions. Checking eligibility prevents complications at tax time.
Consider Taxable Investment Accounts
Once tax-advantaged accounts are maxed out, taxable brokerage accounts provide additional growth opportunities. These accounts lack special tax treatment but offer flexibility, no early withdrawal penalties or required minimum distributions.
Maintain an Emergency Fund
Retirement planning shouldn’t deplete liquid savings entirely. An emergency fund covering 3-6 months of expenses protects against unexpected costs without forcing early retirement account withdrawals.
Diversify Within Accounts
Within each account, spreading investments across stocks, bonds, and other asset classes reduces volatility. Target-date funds automatically adjust allocation as retirement approaches, shifting from growth-focused stocks toward more stable bonds.
Those planning for retirement at home benefit from this multi-pronged approach. Different account types provide flexibility during retirement, allowing strategic withdrawals that minimize tax burdens.
Preparing Your Home for Aging in Place
Financial preparation means little if the home itself can’t accommodate aging residents. Physical modifications and maintenance planning ensure the house remains functional for decades.
Assess Accessibility Needs
Stairs become challenging with age. Single-story living eliminates this concern entirely. For multi-story homes, installing a main-floor bedroom and bathroom creates accessible living space without major renovation.
Wider doorways accommodate wheelchairs and walkers. Standard interior doors measure 28-32 inches: 36-inch doorways provide easier passage. Lever-style door handles replace round knobs that arthritic hands struggle to grip.
Address Bathroom Safety
Bathrooms pose significant fall risks. Grab bars near toilets and in showers provide stability. Walk-in showers with built-in seats eliminate the need to step over tub edges. Non-slip flooring reduces accident likelihood.
These modifications cost relatively little when installed during planned renovations. Retrofitting later often costs more.
Plan for Maintenance Costs
Homes require ongoing upkeep. Roofs need replacement every 20-30 years. HVAC systems last 15-25 years. Appliances fail. Setting aside 1-2% of home value annually for maintenance creates a buffer against major expenses.
For those planning to retire at home, understanding these costs prevents budget surprises. Deferred maintenance compounds, turning small repairs into expensive replacements.
Consider Future Services
Aging in place may eventually require outside help. Meal delivery, housekeeping, lawn care, and home health aides represent potential future expenses. Researching local service availability and costs helps retirees budget accurately.
Long-term care insurance, purchased before health issues arise, can offset some of these costs. Premiums increase with age, making earlier purchase more economical.
