Old age home expenses in India
Many of us are likely to live long enough on this planet to need some kind of assisted living.
How much exactly does staying in an old age home cost? Frankly I have not done enough research to do such a post, but here is some rudimentary info. You will need to do more research yourself…
For a typical Tam Brahm – who is looking for veg food and a very simple lifestyle, I found the prices ranged from Rs. 10,000 a month to about Rs. 15,000 a month. I am not imputing any cost to the deposit which is to be made. The deposit varied from Rs. 50k per couple to Rs. 15 lakhs per couple. These costs do not include medical expenses or any other type of special expenses. SIMPLE DAY TO DAY LIVING EXPENSES including laundry, food, electricity…THAT IS ALL.
Assuming it costs about Rs. 15,000 per head per month TODAY…it is likely to cost the following:
2011 Rs. 15,000 p.m. x 12 = Rs. 180,000
2020 Rs. 30,000 p.m. x 12 = Rs. 360,000
2031 Rs. 60,000 x 12 Rs. 720,000
So how much money will you need to retire to a home like this?
Well just for the food and shelter you will need Rs. 360,000*30 years = Rs 1.8 crores if you retire in 2020. Apart from this you need to provide for your other expenses like telephone, travel, clothes, festivals and of course medical expenses.
Now Rs. 1.8 crores invested in a bank should give you about 5-6% p.a. returns POST TAX..assuming you do not do anything stupid like investing in a venture fund or an infra fund without any understanding of infra or venture! Straight simple income fund, bank fd, senior citizen fund, index fund (inflation protection)…kind of portfolio. Rs. 9 L will be the income in the first year..and you will REINVEST Rs. 640,000 – all this reinvested amount will help you tackle with inflation.
Hopefully I will do more posts on old age homes and its expenses….I NEED IT, not sure whether you do. Yes I do have a lovely daughter – but have a heart, why should she put up with a cranky old man with stupid ideas….OMG my heart goes out for her already!!!
By the way, did I hear you saying you have a spouse and you are retiring in 2031?
Well the amount is 720,000 * 2 *30 = 4,32,00,000…..is the amount…
Happy 2012!
SAM
Subra,
You really woke me up with this article. I seriously need to look into this now! Btw – Thanks to one of your previously articles – I found out that my hubby was not insured!!!!!! Can you imagine my shcck! Of course all that has been remedied. Thank God and Thank you,
And yes I too would not like to burden my now 14 year old with cranky self!
Vidya
It is easy to underestimate just how much is required for old age esp considering the longevity these days and not considering the inflation !!
Old age retirement homes seem to be in a nascent stage – I am yet to see good reasonably priced ones …
Paramjit
What is reasonably priced, Vidya? I have seen in Coimbatore, Pune, Bengaluru – I found most of them reasonably well priced.
As time goes by and American branded health care and ‘old age homes’ come on the scene, you will find Indian un branded ones really cheap.
Are we not seeing that in BRanded nursery schools? at Rs. 125,000 a year, schools are not cheap are they? Sure there are schools at 40k a month also….but for many people that is ALSO EXPENSIVE. very expensive!!
Rakesh
Subra Sir,
Excellent post. I think we all need to look into it.
There is no guarantee that our son would look after us once we retire even though you looked after your parents.
Lifestyle changes very quickly and he may end up throwing us out of the house too. I have seen quite a few cases in my neighborhood already.
We all need to plan for our future.
Rakesh
haque
there goes my peaceful sleep
subra
haque – afternoon sleep or night sleep also? Normally people do not like facts
CodeRed
Excellent post sir!
Sriram
Subra,
Going by your assumption, while the cost is doubling in 10 years, you chose to multiply 3.6 L by flat 30 years for someone planning to retire in 2020. Infact the calculation should be 3.6 L x 10 years + 7.2 L x 10 years + 14.4 L x 10 years. Am i right, Subra?
Vidya
@Paramjit – Which are the old age homes in Pune or Bangalore which you think are reasonably prized ? 🙂 I had found 2 ( not in Pune ) that charged abt 35-37K per mo per person [ not including any medicines or anything else ]. Not sure if that is expensive or not …
Reasonably prized is obviously based on how much one earns / if both spouses earn / responsibilities / EMIs / weddings to be taken care of in the family / children / any pension from the elders which can be used towards the monthly bills… etc etc etc !!! Too too subjective ..
subra
right Sriram…however see what I have said…in the early part you will earn an extra amount which will be invested back…that will take care of inflation. Exactly the way to do will be to increase say 9% every year…and add…However that assumes you will leave the corpus to your kids…I AM ASSUMING YOUR CORPUS WILL ALMOST DIE with you ….
Vidya you really looked for the luxury ones..at 37k per person per month, the requirement is slightly up…say Rs. 16 crores for a couple retiring in 2031…God bless….
subra
Vidya,
can u share the details of the 37k per month…and if there are deposits to be made..
Jsan
Sirji, One more bouncer 🙂
I am retiring in 2043 and thankfully have been reading your blogs since sometime now so prepared for this. The power of compounding works for the amount you have invested same way it multiples your requirements as well after retirement
Vidya
@Subra – I will have to check. I had done the research some 2 years back .. so … no idea where the details are now. I do remember one was near Bangalore. Both places required a deposit but can’t recall the amount.
I had looked up Dignity too but at that point they mentioned they looked after people with Alzheimer’s predominantly. Not sure they have changed now.
Do you have details for less priced homes ?
anon
This was a tough read, tougher than a cold water bath on a chill morning.
Sobering as hell sir, subrabhai.
But thank you.
pravin
um,what am i missing? arent many indians -atleast those who read subra’s blogs- going to be owners of houses/apartments in the next 20 years?. will reverse mortgage not work out for them?
i mean owning a house remains the great indian aspiration and it doesnt seem to be dying out anytime.
ashok
I have researched many such homes, however I am skeptical about the long term feasibility of many of these projects. They are being run by real estate promoters, the same people who build shopping malls, commercial real estate and giant apartment blocks.
Lets say you move into one such home (basically a serviced apartment where the food is provided for ) — what happens if the promoting company goes bankrupt ? or what happens if they decide after 10 years to redevelop it as a shopping mall ? or what happens if they decide to arbitrarily hike up the monthly service charges? Many of these homes dont give you title – so you are basically at their mercy … you are going to be too old to take them to court, given the state of the legal system.
Currently this sector seems largely unregulated there are no proper laws protecting the people who buy such homes. It seems it might make more sense to own your own apartment and hire the required people to look after and service it for you. Perhaps there is a business opportunity in providing just that service aspect.
ashok
And thank you for writing this post – and I hope you will write more on this subject in the future.
subra
ashok
You cannot worry so much into the future…what happens if you live for only 9.5 more years? You need to take life 2-3 years at a time. Paranjpe builders is making money by creating Atashree in pune – why the hell will he convert it into a Mall? And if u own the place there is no way how he can do that, can he? Yes with any arrangement u run the risk….but you need somebody to cook, some nurse to make sure you have ur medicines 4 times a day, a driver whose costs can be shared….hey life is not easy, is it?
BHARAT SHAH
going through the discussion it seems better to compromise with our dear ones, if at all available, than to think of old age house. it is both side advantageous in every aspects, and if calculated, it could save a hefty amount, which may even create retirement corpus for next generation! only one needs to be a little more compromising and sacrificing ego. of course , the old should keep a title with him till he/both dies/die!