How To Pay For Senior Living

Where will you live in your retirement years? You may have sketched out a plan to age in place. But have you addressed Plan B—the unknown curveballs life might throw, which may include other levels of care?

Today, many seniors have not altered their financial planning—which was originally designed for asset growth using riskier investment vehicles (such as securities)—in favor of investment vehicles that produce stability, accessibility, liquidity and guaranteed monthly income using low- to zero-risk investments.

Here’s a startling fact: Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and support in their remaining years. In addition: Medicare does not pay for senior living communities or comprehensive in-home services, and you have to be destitute to qualify for Medicaid.

Making a Plan B is crucial. You want to head into your retirement years having both thought of the curveballs you (and your spouse) may face and planning for them financially. A Plan B is not just important to you—it’s essential to giving your adult children peace of mind. A lack of proper planning causes a great deal of family stress, and often in an urgent set of circumstances.

How much do you need to plan for? Here’s a look at what different levels of care may cost and the financial resources you might have at your disposal.

The price tag on aging gracefully

For seniors who require care, monthly expenses vary widely. The following are the national median monthly costs for different levels of care as of 2021, provided by the respected Genworth Cost of Care Survey (except where noted). Costs will vary depending on where you live. If you live in a state that has a high percentage of retirees, your costs can be at least 25% higher than these estimates.

• Living at home with in-home care services: up to $5,148 per month. This can be as simple as getting help with household chores or as extensive as receiving nurse-managed care.
• Assisted living facility: $4,500 per month for entry-level care. Residents receive help with daily activities, including medication management, personal care, and mobility, along with meals and amenities.
• Memory care facility: $6,935 per month, according to a 2021 estimate from AARP. These facilities provide secure living, care, and activities for individuals with Alzheimer’s or other forms of dementia.
• Nursing home care: $9,034 per month for a private room, including meals and amenities. For those who require around-the-clock medical attention and assistance with most daily activities.

Remember, as your medical condition worsens, the level of care needs increases, causing your monthly out of pocket to increase and reducing your saving and assets. It is very important to account for this in your planning. You could be aging in place and realize that a senior living community offers a more comprehensive care plan than you can arrange with in-home care.

Paying for senior living

How will you and/or your spouse pay for the care you need? First, take a 360-degree view of everything you’ve got, including:

• Investment income. Stocks, bonds, real estate, and other investments may provide regular dividends or can be liquidated over time.
• Drawing from retirement funds can be an effective way to finance senior living. However, it’s crucial to have a budgeting strategy to ensure the savings last as needed.
• Long-term care (LTC) insurance. These policies can significantly offset the costs of various senior living arrangements, especially more intensive care options like nursing homes. If you have LTC insurance, understanding your benefits and benefit qualification triggers is essential.
• Veterans’ benefits. It’s worth investigating if you or your loved one served in the military.
• Selling or renting property. The proceeds from a sale or regular rental income can make a significant difference in affording care.
• For seniors with limited resources, Medicaid can be a crucial source of funding, particularly for nursing home care.

Many people have more assets and benefits to tap than they realize. At Longevity Income Solutions, we counsel our clients in making the most of what’s available while ensuring they get the care they need.

Getting started

Whether you’re 55, 65, 75 or 85 years old, right now is the time to start thinking about how you’d pay if you or your spouse needed care. As with most things in life, the earlier you start planning, the more flexibility you’ll have in your decision-making down the road. Contact Longevity Income Solutions to learn about how we help clients plan for their future care needs.