Do you have enough money to survive when you retire or move into a senior living community? According to the National Council of Aging, nearly half of adults aged 60 and over had household incomes below the Elder Index value in their area. That means their average income is below the amount to afford basic needs.
Paying for assisted living doesn't have to mean emptying out your bank account. There are many ways to curb the costs or even cover them altogether.
Here's your guide on long-term care costs and how to afford them.
The cost of assisted living varies depending on factors such as:
Costs are generally higher in metropolitan areas and states with a high cost of living. Seniors who need more care will need to move into a community that offers it, which is often more expensive.
Some communities offer amenities such as social activities, dining options, and personalized care plans. They also have fully furnished private rooms built close to public areas, such as dining areas and gyms.
Many families pay out of pocket for their senior care. However, that isn't always an option for most people.
Some seniors have little to no relationship with their families and must pay for assisted living on their own. Others don't want to burden their loved ones who struggle to get by monthly. In these cases, seniors should look into some of the many financial aid programs to help offset costs.
The U.S. Department of Veterans Affairs (VA) offers financial assistance to eligible veterans and their spouses. The Aid and Attendance benefit they offer provides additional funds to help with daily living activities and can help cover assisted living expenses.
In addition, most communities offer slight discounts for veteran residents.
Long-term care insurance policies can help cover assisted living costs, depending on the policy's terms. Many policies require individuals to own the coverage beforehand before needing care.
Social Security benefits provide monthly income for seniors, which is especially helpful for those without a lot in their savings. Additionally, some seniors may qualify for SSI, which offers financial support for low-income individuals.
Some life insurance policies allow policyholders to cash out or sell their policy through a life settlement. Similarly, annuities can provide a steady stream of income to help cover ongoing care expenses.
A reverse mortgage allows seniors to borrow money using their home as security for the loan. They can use the funds to pay for assisted living while deferring repayment until the home is sold.
This option is best suited for seniors who own property but do not have heirs to leave it to.
Some states and nonprofits offer financial assistance programs for seniors in need. These programs vary by location and may include subsidies, grants, or low-cost housing options.
An annuity is a contract with an insurance company that allows them to provide regular payments over a period of time. They provide this amount in exchange for one or more contributions.
A person might use an annuity to get guaranteed income and protection from market losses. They can also obtain tax deferral benefits.
Not all seniors will qualify for various programs. In that case, the best thing they can do is budget accordingly and make some sacrifices to afford the care they need.
All seniors should start planning as soon as possible when it comes to their finances. That goes for a senior living community as well as general estate planning.
They need to research their options and understand costs in advance. Their best option may be to move to another town away from their family if that lowers their payments.
Assisted living communities usually offer various senior care payment options.
For example, families may have the opportunity to pay for care in installments rather than upfront lump sums. That can take the form of monthly or quarterly payments instead of annual ones.
A community may decide to defer payments for seniors who are in the middle of selling a home or waiting for an insurance payout. Alternatively, they may offer bridge loans until the senior receives their money.
Private rooms are often more expensive than renting a shared room. Many communities offer semi-private accommodations at a lower rate.
It's easier on seniors if they move into one of these shared rooms with a spouse or a friend.
In some cases, family members contribute financially to help cover the cost of assisted living. Pooling resources can make it more affordable, and it saves them from needing to take on caregiving responsibilities themselves. While it's still more expensive than hiring a live-in caregiver, other resources can help cut those costs.
Some assisted living expenses may qualify as tax-deductible medical expenses. That care must include the treatment or management of a medical condition. Examples include nursing care, physical therapy, and assistance with activities of daily living prescribed by a healthcare professional.
Care that is not directly related to medical care, like room and board, is excluded from tax deductions. The same goes for amenities such as included meals.
Speak with a tax professional to learn what qualifies and what doesn't.
If you need help paying for assisted living, reach out to the experts who can help navigate you through your financial options. You may find that there's a nonprofit program assisting seniors in your exact situation. You'll never know unless you take the time to look.
Liberty Court is a senior living community in Dixon, IL that provides both assisted living and memory care. Our residents can enjoy community outings, fitness programs, and more. Contact us with any questions and to set up a tour.