Moving into assisted living can be both emotionally and financially draining for seniors and their families. Having a strategic financial plan in place is important for not only your financial peace of mind but also your wallet.
Here are five ways to make assisted living more affordable.
Top 5 Ways to Make Assisted Living More Affordable
According to the Joint Center for Housing Studies of Harvard University in a report they did for AARP, the biggest expenses for seniors are healthcare and housing. The research shows that 37% of seniors over 80 are paying over 30% of their monthly income in housing. Not only that, but recent data from Fidelity Investments shows that a couple who retired in 2017 can expect to spend an average of $280,000 for health care costs throughout retirement. This is why having an informed financial plan is so important for your retirement years.
According to the Genworth 2018 Cost of Care Survey, assisted living communities cost $45,000, while semi-private nursing homes cost $85,775 and private nursing homes cost just shy of $100,000 in retirement, depending on the amenities and types of care needed. Ideally, these assisted living costs have been factored into your retirement plan, but unfortunately, many Americans are not prepared for retirement and are struggling financially in their golden years.
Here are five of the top ways that you can make assisted living more affordable:
1. Ask about price flexibility.
Many assisted living communities offer incentives and move-in specials. Find out whether you can negotiate the monthly price for different amenities, room options, room shares or services, based on your family’s specific care needs. Some assisted living communities offer “a la carte” pricing, making it possible to choose some services and take care of others yourself. If a family member is available to fill in care gaps in a more cost-effective way, take advantage.
2. Be strategic with the location.
The cost of assisted living varies by location, so choose a less expensive location, if possible. If a sibling lives in a less expensive area, consider looking there or even at an out of state community that is more affordable. Often outlying communities and suburbs may be more affordable and they’re only an extra 20-30 minutes away.
3. Do your research.
Try not to make a drastic, last-minute decision when it comes to choosing an assisted living community. Be strategic with your financial planning, seek an expert financial advisor’s advice and shop around for the community that fits your family’s needs best. Ideally, create an assisted living plan ahead of time while all decisions are lucid. If there’s a specific location that seems best, join a waiting list, if needed. If you wait until the last minute, you may end up paying for an expensive community that’s not a good fit.
4. Take advantage of Health Savings Accounts.
Being proactive with your retirement healthcare costs can save you thousands of dollars each year. For example, Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) can save you taxable income. Plan ahead and contribute to an HSA tax-free and use the funds for medical expenses. Unused funds roll over every year and surplus funds can be invested. There are also investment tax savings available with these accounts and a qualified financial expert can help you learn more about these savings.
5. Take advantage of long-term care insurance.
If you are unable to pay for assisted living out of pocket and the remainder of costs are not covered through private insurance, Medicare or Medicaid, long-term care insurance can be your friend. Long-term care insurance can supplement care costs so that your family isn’t struggling to finance assisted living long-term care.
In what other ways have you and your family made assisted living more affordable? We’d like to hear your tips in the comments below.