Retirement Home vs. Nursing Home: What’s the Difference?

There are nearly 55 million people over the age of 65 years in the United States. Research conducted by the U.S Department of Health and Human Services suggests that these people require greater medical attention and assistance with regular upkeep and maintenance of their houses.

For these reasons, choosing a home for older adults and retirees can be challenging. Whether it is for yourself or an aging loved one, you want to pick an option that provides value for money as well as peace of mind.

However, senior living and care options come in various forms. A “one size fits all” approach does not work. It all depends on the needs of the individual and the level of care required.

Retirement homes and nursing homes are two popular options for senior living communities. However, there is a lot of confusion about the differences between the two. 

If you’re wondering which of these two options is better suited to your circumstances, it is crucial to understand who they cater to and their pros and cons.

In this article, we will share all the information you need to understand each of these categories. It will help rid the dilemma of retirement home vs. nursing home, enabling you to make the right choice for yourself or your loved ones.

Retirement Home Definition

An image of an older couple sitting on a couch drinking coffee as they look at a laptop

Also known as assisted living home, a retirement home is a private facility built and designed to cater to the needs of older adults and retirees.

These homes allow seniors to live a normal and independent life without compromising the care and support they may need along the way.

Retirement homes provide opportunities and spaces for recreation and socialization. They also have adequate arrangements for medical care and attention.

They are best suited for older individuals who wish to maintain their regular lifestyle and have access to support and care when they need it.

Types of Retirement Homes

Retirement homes or assisted living facilities can be quite varied since they cater to different lifestyles, budgets, and preferences. Here are a few categories of retirement homes:

Retirement Communities

Retirement communities are large, planned facilities that focus on seniors who prefer and can afford to live in private condominiums, townhouses, or other similar independent structures. 

They allow older adults to maintain a certain lifestyle and enjoy their independence while having an active social life with other individuals in the same age group. These communities generally cater to particular age groups (those above 55 or 65).

They offer a variety of activities and can also cater to daily services which seniors might need. These retirement communities are predominantly privately funded and tend to be more expensive.

Subsidized Senior Housing 

Many senior citizens live on fixed incomes which are sometimes not enough to pay for housing expenses. Those from low-income backgrounds can face significant difficulties when finding a place to live that caters to their circumstances.

The Government has programs that subsidize independent living-type apartments for older adults that provide services such as cooking, cleaning, and transportation.

Congregate Care

Congregate care communities have multiple housing units or apartments for seniors with access to a common lobby, dining, and recreational areas. 

They cater to older adults who are self-sufficient to a great extent but may need some assistance with daily activities. These facilities are typically paid for by individuals though some may qualify for housing assistance programs.

Continuing Care Retirement Communities

Continuing care facilities follow the concept of “aging in place.” They cater to the present as well as future needs of senior citizens. It allows older adults to plan for any potential medical conditions they may face in the future.

Residents can move from an assisted living lifestyle to a nursing home within the same facility. It makes the transition process easier for them since they remain in familiar surroundings, irrespective of their circumstances.

These facilities are privately funded and do not cater to people that require assistance from government programs.

You may also consider adult foster care.

Cost of Living in a Retirement Home

A picture of an older couple sitting on a bench outside of an aged care facility

If you are considering a retirement home for yourself or your loved one, you must have searched for the answer to this crucial question. What is the average cost of living in a retirement home?

The cost of living in a retirement home varies. It depends on the location, the type of housing on offer, and the amenities included. 

For example, living in a private condo will be more expensive than a multi-apartment unit. Similarly, living in a large city or a desirable area with limited options may be more expensive.

The greater the number of services and amenities on offer, the higher the cost of living. This should also factor into your cost evaluation. 

The monthly average cost of living in a retirement community is $2,552. As per data from Business Insider, it can vary between $1,800 to $4,000 depending on the state you are in. 

The same data suggests that retirement homes are the most expensive in Massachusetts, New York, New Hampshire, Connecticut, and Rhode Island.

They are the least expensive in South Dakota, Minnesota, Louisiana, Utah, and Illinois.

Some retirement homes may require new residents to pay an entrance fee to move into their facility. This fee is used to pay for some of the activities or amenities provided by the retirement home. 

There can be other fees as well. For example, a pet fee if you want to bring your pets along. 

You’ll want to get as much information as possible about the cost of living before you decide on a retirement home that meets your needs and fits your budget. Here are a few questions that you can ask: 

  • What is included in the monthly base rent?
  • What fees, services, and amenities are not included in the rent and need to be paid for separately?
  • What all services and amenities are available on-demand?
  • What are the various accommodation options available and their price difference?
  • At what intervals are the prices increased and by how much?
  • What is the duration of the lease?

Related: Pros and Cons of Retiring in Utah

How to Pay for Retirement Homes

A photo of an older person wearing a white shirt putting a coin into a small white piggy bank

A crucial factor when choosing a retirement home is your budget. It becomes easier to make the right decision if you have a good understanding of your finances. 

Staying in a retirement home has its costs. You need to plan for these costs or at least be aware of some of the ways you can pay for some of these costs, if not all.

There is one relevant question that many people have when thinking of ways to pay for their retirement homes: is a retirement home considered long-term care? 

The answer is no. Unfortunately, you can’t use Medicare or Medicaid to pay for it. However, there are some of the ways you can:

Private Funds

It is probably the most straightforward option. If you or your loved one have been saving money and planning for retirement, these funds could be used to pay for retirement home facilities. 

Home Equity

If you or an aging loved one own a home, you can sell it or rent it to generate funds to pay for a retirement home. 

You can also apply for a reverse mortgage to borrow against the value of their home. They can receive the funds as a lump sum or fixed monthly payments.

Long Term Care Insurance

Long-term care insurance can cover aspects such as help for housekeeping, transportation, meal preparation, and other activities. If your insurance covers these, you may be able to pay for some costs related to your retirement home expenses.

Life Insurance

Some insurance policies can be sold to a third party. You can use the funds generated by this to pay for your retirement home expenses. Various kinds of life insurance policies can be used for this. However, they may need to have a certain minimum value in death benefits.

Bridge Loan

You may have assets that you can liquidate to cover the retirement home costs, but doing so needs time. In such situations, you can take a short-term loan to cover your expenses in the meantime.

Housing Assistance

The U.S Department of Housing and Urban Development offers assistance programs for older adults from low-income backgrounds. These help seniors access housing either by way of public housing or through rental assistance.

Social Security

Seniors receiving pensions or social security retirement benefits can utilize these funds to pay for some of the expenses associated with living in retirement homes.

Nursing Home Definition

An image of an older gentleman in a nursing home using a zimmer frame. He is being assisted by a nurse

By definition, a nursing home is a facility that provides round the clock and medical and personal care to older adults with severe physical or mental conditions. 

They cater to seniors who are unable to live independently and need help and assistance with activities of daily living (ADLs) such as bathing, getting dressed, walking, or eating.

There are 15,600 nursing homes in the U.S with over 1.7 million licensed beds. Data suggests that nearly 50% of people who live in nursing homes are over the age of 85 years. Over 80% of residents need help with at least three activities of daily living.

Mental conditions are also common, dementia being the most widespread. It affects nearly 50-70% of the residents.

Nursing homes offer a range of services starting from long-term residential care to rehabilitation and nursing care after hospitalization. These can include orthopedic care, wound care, physical, occupational, and speech therapy, after-surgery support, and breathing treatments.

Nursing homes also provide recreational activities for their residents, keeping in mind their age and health condition.

To sum up, nursing homes are suitable for senior citizens who need medical care and need to be monitored and supervised but don’t need hospitalization.

How Much Does Nursing Home Care Cost?

Nursing homes provide more care and supervision than retirement homes. The cost of this care varies across geographical areas and facilities. 

As per Genworth’s Cost of Care Survey 2020, the monthly median cost of living in a nursing home facility is $7,756 for a semi-private room and $8,821 for a private room. 

If we consider these costs on an annual basis, the median cost ranges from $93,000 for a semi-private room to $105,000 for a private room. These costs have risen by over 3% in just one year. 

If we compare these costs across states, they range between $5,000 to $14,000 except for Alaska where the median monthly cost is nearly $36,000.

The five most expensive states when it comes to monthly nursing home costs are Alaska, Massachusetts, Connecticut, New York, and Hawaii.

The five least expensive states are Missouri, Oklahoma, Louisiana, Kansas, and Arkansas.

These figures may have sparked a question in your mind. Is assisted living cheaper than a nursing home? The answer is yes. The cost of assisted living can be almost half of the cost of living in a nursing home.

This may lead you to another question. Is assisted living better than a nursing home? Not necessarily. Both these facilities cater to different audiences. Which facility is better suited to you depends on your circumstances and the level of care you require.

Retirement homes cater to people who are independent but want to be able to access care and support if they need it. Nursing homes are geared towards people who need round-the-clock and care and medical assistance. 

The reason why nursing homes are more expensive is that they need to hire a large number of skilled and licensed medical professionals to care for their residents. These services are generally not offered by retirement homes.

How to Pay for Nursing Homes

An older lady sitting in a wheelchair is being assisted by a female nurse. They are sitting outside on a sunny day on a green lawn. There is an umbrella, trees, and buildings in the background

The cost of living in a nursing home can be fairly high. It is estimated that nearly 52% of people turning 65 will need some form of long-term care in their lives. However, a very small percentage of people prepare in advance to accommodate these costs for their life post-retirement.

In such a scenario, it becomes important to be aware of some of the ways in which seniors can pay for nursing home care. Here are some of the most common ways:

Medicare

Medicare is a health insurance program for people who are 65 years and older, offered by the U.S Government. This program can pay for your nursing home costs but not for a very long period.

It can cover short-term care or rehabilitation costs in a nursing home. However, it is not a great option for long-term care. As per the information on the Medicare website, it covers the full cost of care for the first 20 days in the nursing home, a partial amount for the next 80 days, and none after 100 days.

Medicaid

Medicaid is a program funded by the federal and state governments. It covers the cost of medical care for people from low-income backgrounds. It can pay for nursing home care. However, the eligibility criteria vary across states.

Department for Veteran Affairs

The Department of Veteran Affairs does pay for nursing home care expenses of veterans. However, vets need to meet certain eligibility and enrollment criteria based on their income, level of disability, and service status.

Long Term Care Insurance

Long-term care insurance does cover nursing home costs. However, the benefits depend on the policy and can vary.

Private Pay

This is one of the most common ways of paying for nursing home costs. These funds can come from savings, pension, retirement income, home equity, other financial assets, or help from family members.

Tips for Choosing a Nursing Home

Choosing the right nursing home for yourself or your loved ones can be challenging. It may require significant time and effort. Here are some tips that can help:

  • Take some time to evaluate your needs, priorities, and concerns.
  • Get recommendations from health care providers, social workers, friends, and family.
  • Narrow your options by researching online and then visit some of the shortlisted options.
  • Evaluate the cleanliness, maintenance, security, licenses, certifications as well as the ratio of staff to patients.
  • Understand the medical services offered by the nursing home.
  • Observe the residents and their grooming.
  • Assess staff members.
  • Enquire about the activities that are designed for residents.
  • Evaluate costs, amenities, quality, and services.
  • Check reviews and ratings.

Questions to Ask a Nursing Home

One of the simplest ways to evaluate whether or not a nursing home is right for you is by asking questions. Here are some questions you can ask a Nursing Home staff:

  • What is the pricing structure?
  • What is included in the monthly costs and what needs to be paid for separately?
  • How often does the price change and by how much?
  • Are you certified by Medicare or Medicaid?
  • Do you fulfill the state licensing requirements?
  • How many residents are there in the facility?
  • What kind of medical services are available?
  • How many nurses are available during the day and at night?
  • How often do doctors check on patients?
  • Do they conduct background checks on all employees?
  • How often do they provide updates to family members?
  • What are the provisions made for emergencies?
  • What kind of activities are available for residents?
  • Can family members participate in activities?
  • What kind of food is offered to residents?
  • What are the visiting hours?

Final Thoughts 

Whatever type of senior living facility you choose, you can make post-retirement life comfortable, safe, and enjoyable for yourself or your loved ones. 

There are many myths and wrong notions associated with senior living facilities. You can definitely enjoy a good lifestyle and have access to recreational and socialization opportunities — without compromising your health and safety needs.

There are various living options these days that cater to the unique and diverse needs of senior citizens. They offer comfort, independence, enhanced quality of life as well as access to medical care and support. Retirement homes and nursing homes are the most popular options. 

Understanding your needs, priorities, and preferences is a necessary prerequisite to being able to choose an option that is best suited to you. It is also important to understand the difference between the two options and assess which of these works for your circumstances.

With this comprehensive guide, you can easily weigh in on the question of retirement home vs nursing home and make an informed decision for yourself or an aging loved one.

Related: Pros and Cons of Assisted Living