Covering the cost of a retirement home

Just like organising your estate, choosing a suitable place to live after you retire is something that is best done as early as possible. This helps put your mind at ease, takes pressure off your loved ones, and ensures that you’ll be comfortable later in life. It’s always difficult to predict your future financial and logistical needs, so myLIFE is here to help give you an idea of the different types of retirement home, how much they cost and the available sources of financing.

Definitions

There are three types of home for the elderly in Luxembourg, all supported by the Ministry of Family, Integration and the Greater Region.

• Integrated centres for the elderly (Centres intégrés pour personnes âgées – CIPAs) are dedicated to non-dependent elderly persons, and provide support and general day-to-day services. Thanks to the equipment and medical staff on site, CIPAs are able to take care of residents as their health declines and as they require more assistance. As of 1 August 2020, Luxembourg had 30 registered CIPAs.
• Care homes take in dependent elderly persons who need assistance in the main aspects of daily life. They offer support in carrying out basic day-to-day tasks such as brushing your teeth, going to the bathroom, eating and getting dressed, as well as providing medical care. You normally qualify for a place in a care home if you require more than 12 hours of care and support per week. There are 22 care homes across the country.
• Sheltered housing (11 existing establishments). Available for sale or rent, these are closer to residences offering personal support services on demand, as opposed to CIPAs or care homes. These residences must meet certain criteria in order to obtain state approval. However, medical care is not included, and the number of staff members on site is limited. This kind of accommodation can serve as a stepping stone before moving into one of the other types of retirement home mentioned above. Senior residences are another option similar to sheltered housing. These have the same features as structured housing, but are not subject to the same regulatory standards. This means that they cannot be called “structured housing”, and residents are not eligible for the financing usually awarded to those who are unable to cover the required accommodation costs.

The list of homes for the elderly can be found on the website of the Association nationale des infirmiers luxembourgeois or at www.luxsenior.lu.

The average monthly budget per person is EUR2,400 for accommodation, meals and daily support.

Financing

Finding the exact cost of a retirement home is not always straightforward. Generally, as the prices of each establishment are largely the same, the average monthly budget per person can be estimated for accommodation, meals, and the daily support required to carry out basic day-to-day tasks. These price variations are mostly due to different accommodation conditions, i.e. room sizes and available amenities. It’s important to remember that, for the same price, your experience may vary widely depending on where you go. Make sure to visit the site in person and compare options before signing anything! According to a report from the Chamber of Employees (CSL) published in December 2019: “In 2018, it will cost on average for a place in a single bedroom 2.452 € per month in a CIPA, 2.706 € in a care home and € 1,718 per month in sheltered housing accommodation. These are therefore average prices, some institutions may charge more than € 4,000, or even more than € 5,000 per month for a single room. “

How can I cover these costs? In addition to your state pension earned during your working years, you can use your savings or any other available capital to help cover the cost of a retirement home. This is why you should plan for your retirement  as soon as you start your professional life.

Selling your house is also an option to consider if you need to cover the cost of a retirement home. This obviously requires that you be a homeowner, and your assets will take a substantial hit. This choice is never easy; however, if you can no longer use your home, selling it enables you to afford accommodation better suited to your needs that would otherwise be out of your price range.

On the other hand, selling your home is clearly out of the question if your spouse must continue to live there. In this case, your spouse is entitled to immunisation conjoint, i.e. a monthly tax exemption of EUR1,927.20 per month for an index 834.76. This aid may be supplemented with a contribution towards your rent or mortgage repayments (up to EUR834.76).

As not everyone can necessarily cover these monthly accommodation and catering costs, the National Solidarity Fund (Fonds National de Solidarité – FNS) can provide funding if the establishment in question has been approved.

As not everyone can necessarily cover these monthly accommodation and catering costs, the National Solidarity Fund (Fonds National de Solidarité – FNS)  can provide funding if the establishment in question has been approved. Please note that not all structured housing establishments are eligible.

A little extra help

If you’re struggling to cover the cost of a retirement home, the FNS can pay for part of the accommodation. This is the supplementary acceuil gérontologique benefit for “any individual living in an establishment indefinitely and whose resources are insufficient to cover the accommodation costs and meet their personal needs”. Please note that this aid is not available for all establishments, and can only be used in Luxembourg. You should therefore check whether your desired retirement home is eligible.

This aid is calculated by taking the difference between the accommodation price and the applicant’s total income, minus an amount for personal expenses (EUR475.81 for a cost-of-living index 834.76). This is paid directly to the retirement home. Please note that homes in Luxembourg owned by the applicant will be mortgaged by the FNS. Furthermore, aid will not be granted if the assets held in the applicant’s account are EUR20,869 or higher.

Dependent persons who require at least 3.5 hours of care per week are eligible for long-term care insurance. Once the application has been analysed and approved, this insurance will cover a certain number of care hours through the social security system. This is paid directly to the retirement home.

In Luxembourg, the share of the population aged over 65 could reach 25% in 2060, compared to just over 14.6% today. In other words, available places in retirement homes might become increasingly scarce in the years to come. On top of these practical considerations, it’s important to assess and prepare for the financial side of things well in advance so that you can cover the specific costs related to this important stage in your life. Don’t leave it until the last minute!