Retirement planning can be daunting, especially as your retirement date looms closer. You begin to ask yourself questions like “Have I saved enough?” or “What if a disaster happens?” 

Or maybe you just want a little bit extra money on the side for exploring the world now that you have the time. 

That’s where building an ADU (also known as a granny flat) comes in.    

What is an ADU?

An accessory Dwelling Unit (ADU) is an additional housing structure built on a property that already has a main home or main structure. You may have also heard them referred to as Granny Flats, Casitas, or even In-Law Suites. They can be built on a single-family lot, multi-family lot, or duplex. It has its own entrance, separate from the primary house, as well as a kitchen, bathroom, and living space. 

These units can be rented, year-round, and add a lot of value to a property. Accessory dwelling units take different structural forms. They can be garage conversions, stand-alone units, attic or basement conversions, or be attached to the main house.

They have a wide variety of uses, especially for retirement planning as they can bring in steady income or just be a nice home to stay in as you age.  

If you’re interested in building an ADU on your property, Maxable provide a free ADU Planning Phone Call to help get you started.

Downsizing Never Looked so Luxurious

A large 3,000 sq ft home may make sense if you have a family with multiple kids, but odds are, if you’re nearing retirement age, those kids have flown the coop. 

We’ve found that many older couples just don’t need all that space and as you grow older, it may get harder to maneuver especially if you have a two-story home. 

That’s why an ADU just makes sense.

Not only are you living more sustainably, but you also have complete freedom to design the space any way you want. 

Don’t let the term “granny flat” fool you. ADU designs have evolved to look sleek and beautiful while still being spacious and functional.

Keep in mind that as you grow older, you may need specific details in your ADU as well. Just to name a few:

  • 32 inch or wider door frames
  • Handrails where necessary
  • Shorter countertops in the kitchen
  • Completely level floor plan

Our Maxable designers always take the homeowners’ needs into consideration when designing an ADU.

Take Nancy for example. When her husband was diagnosed with Parkinson’s, they began to explore their options to make his life easier. Jared Basler, our lead designer, did his research on designing a home for his condition. The ADU is essentially a smaller version of the main home making it easier for him to move around since it’s a familiar layout. 

Not only is it functional, but it’s also beautiful and well designed.

What about my main house?

retirement planning

You actually have multiple options when it comes to the main house.

If income is your main goal, you most certainly can rent out your main house while you live in the ADU. You’ll live mortgage-free and maybe even have a bit extra to spend on yourself. 

If privacy is a concern, there are creative ways to create division between the two units. Fences are always an option, but if you’re looking for something a bit more cost-effective, privacy screens are great too and come in beautiful designs.

To learn more about designing your exterior space, check out our E-course where we cover everything you need to know about designing your ADU. Enroll here.

Do you know who else may need a new home? Your kids.

Odds are they’ve started their own families and are looking for a new home. What better home than the one they grew up in?

Passive Rental Income

So maybe you’re not ready to downsize and prefer to stay in the main house. Renting out your ADU is still an awesome way to bring in passive rental income if you decide to rent it out. 

Let’s look at some numbers. We’ll use San Diego as an example.

The average rent for a 1 bedroom apartment in San Diego comes out to about $2,200 for a 870 sq ft unit. Annually, this will bring you $26,400 and even more if you decide to rent out your main house. Rent prices are steadily increasing as well, which means higher ROI down the road for your retirement planning. 

We highly recommend researching average rental prices in your area to find out how much to charge for your ADU. 

How much will it cost to build an ADU? 

The cost to build an ADU varies depending on your jurisdiction.

For cost estimates, click your region below for the full blog. 

San Jose

San Diego

Los Angeles

There are three large components of your ADU costs:

  1. Design
  2. Permitting
  3. Construction


In this phase, your designer isn’t only responsible for designing your ADU. There are multiple other forms and documents that need to be put together like Title 24 and floor plans of the main house that your city will require to get your permits. 

Once those are completed, they have to be sent to your city planning department for approval, which can be a huge headache. Luckily, our designers will take on that burden all the way until those permits are handed to you.  

That’s why we can’t stress enough how important it is for you to hire an experienced ADU architect or designer and NOT a draftsperson. A draftsperson will only sketch your designs and leave you on your way to handle the permitting process by yourself. 

retirement planning


Permitting comes with a few fees and your designer should be completely transparent about what those fees are. Again, the fees will vary depending on your jurisdiction, but one thing for sure is that you won’t have to pay a development and impact fee if your unit is under 750 sq ft.

If your ADU is over 750 square feet you’re still in luck. Fees will be made proportional to the square footage of the ADU. This will make the fees significantly lower than what they were prior to SB 13 being passed.  


This will most likely be your heaviest cost since you’re paying for labor. 

Maxable can help you review your general contractor bids and pick the best fit for your project. Schedule a free ADU Planning Phone Call with an ADU expert to get started. 

How can I finance my ADU?

Renovation Refinance Cashout

This option is great for when you have a home with high equity. You can cash out up to 90% of the value of your home with rates as low as 3.2%.

As you get closer to that 90% max, your rate will increase, but your lender should be able to refinance you at the end of the project back down to a lower interest rate. 

What about a HELOC? These typically have higher interest rates than the primary home because it’s a secondary loan and typically seen as “riskier”. 

retirement planning

Home Equity Conversion Mortgage (HECM)

This type of loan is ideal if you have limited income, making it perfect if you’re retired. 

It’s like a Reverse Mortgage but with greater consumer protections.

You can use the HECM for the construction phase. When the construction is done, it can be refinanced to a traditional mortgage. 

If you decide to rent out the unit, your renters are paying that loan off while also creating cash flows for you. 

Is an investment like this worth it for retirement planning?

Even if you’re not renting out your unit or main house and aren’t getting that passive rental income, you’re still at a great financial advantage when it comes to retirement planning. 

Nursing homes are expensive! Over a ten year period, you could be paying up to $600,000 to live in a nursing home. 

Compare that to the $150,000 you’ll likely spend on building your ADU that will be a part of your home for many years to come. Plus, you get to stay in a place that feels familiar and comfortable. 

We often see younger couples build ADUs on their properties so that their parents can stay close and be cared for. 

Janie, a Maxable client, did just that.

She and her husband were growing more worried each day about her 95-year old mother-in-law living on her own. Nursing homes weren’t ideal since they wanted her to be close so that they could care for her themselves. 

An ADU was a perfect solution since it allowed her mother-in-law to maintain her privacy while still getting the care that she needed. Paired with a great designer and general contractor, the project went smoothly and is a huge success for the whole family. To read more about Janie’s experience and see more photos of their ADU, click here. 

ADUs can bring so many benefits whether they be financial or personal, especially if you’re thinking about retirement planning. Get connected to the ADU experts and designers to learn more about getting your project started. Book your free ADU Planning Phone Call today. Talk to you soon!