Are You Financially Ready for Costs of Senior Living? Key Questions to Ask Yourself
The saying goes that the only constant thing in life is change, which can be true when it comes to the costs of senior living. That’s why taking the time to assess if you are financially ready for what lies ahead—and creating a roadmap to get there—is a smart strategy.
Understanding the need to plan for the costs of senior living
When you first start to think about how to pay for assisted living, the cost of memory care, and the overall costs of senior living, you might be left with one big question: “Just how much will senior living cost?” It’s difficult to give an average cost for independent living because many factors play a role, such as location, services and the type of amenities included.
It is important, however, to know that independent living is always much less expensive than assisted living, memory care, or skilled nursing. In 2023, the estimated average monthly cost for assisted living (private room) was $5,350, and $6,160 for a semi-private room memory care.
The rising cost of healthcare is just one reason why many seniors who are living on their own successfully now want to secure a senior living community that will offer them multiple levels of care. Not only does this give them peace of mind when they otherwise might be worrying about paying for assisted living or the cost of memory care, but it also helps protect their finances moving forward.
Related: What’s Included in the Cost of Senior Living
Assessing your readiness
Cost is definitely a factor when thinking about the retirement you have in mind. But it’s not the whole story. Ask yourself:
“What kind of lifestyle do I want?”
- A full-service senior living community with all levels of care and resort-style amenities?
- A senior living community located in a specific geographic area, such as near a university, by the sea, in the mountains, or an urban high-rise?
- A buy-in community with a large entrance fee, or a community with a simple monthly fee?
Knowing what you have in mind will help you as you consider your options and the costs of senior living.
Related: Tips for Funding Senior Living Expenses
Take a look at where you are now
To determine if you are ready to handle the costs of senior living, start with an assessment of your current financial situation:
- What are my current ongoing debts? (loans, credit cards, etc.) When will I have these paid?
- How much am I currently able to set aside each month for the future? Do I have funds each month I can put away, or am I barely making ends meet?
- What are my current medical expenses, and how long will these continue? Think about medication, visits to physicians, ongoing therapy, etc.
- What is my monthly income? Stocks, pension, Social Security, etc.
- What funding sources do I currently possess? For example, long-term care insurance, Veteran’s Aid & Attendance, savings account, equity in home, etc.
- Overall, am I worried about the future, paying for assisted living, or the cost of memory care?
Once you have a picture of where you stand now, you can begin realistic budgeting for the costs of senior living
Now’s the time to gather and get organized: check your files, look inside your safety deposit box, go online and shake your piggy bank. Here are some documents you might collect:
- Bank and brokerage account information
- Deeds and mortgage papers
- Insurance policies
- Monthly outstanding bills
- Pension and retirement benefits
- Social Security payment information
- Stock and bond certificates
But don’t stop there when investigating funding sources, you could use when faced with how to pay for assisted living or memory care. You may be overlooking other possibilities:
- The money in your home. People often overlook their home when considering their financial assets and how they could use them when paying for assisted living or memory care. You could sell your residence and use the proceeds. Renting your house out is another way to go.
- A reverse mortgage. A reverse mortgage is a type of home equity loan for homeowners 62 or older. The lending bank makes payments to the borrower in a single lump sum, in monthly installments, or as a line of credit. The loan does not have to be paid back until the last borrower (often couples will both sign) passes away or moves from the home for one full year.
- Life insurance conversion. Anyone with an in-force life insurance policy can transform it into a pre-funded financial account that disburses a monthly benefit to help pay for long-term care. Unlike life insurance, this account is a Medicaid-qualified asset. If you decide to use life insurance conversion as a source of funding senior care, it’s best to wait until there is an actual need for care first.
- Long-term care insurance. As a source for funding senior care, long-term care insurance helps to pay for the cost of home care, adult day care, assisted living, memory care, skilled nursing and hospice by covering services typically not covered by health insurance, Medicare or Medicaid.
- Veterans Benefits. War-era Veterans, dependents, and surviving spouses are eligible for VA Aid and Attendance. It is a tax-free reimbursement for home care, board and care, assisted living and skilled nursing. Veterans and spouses who need help with some of the activities of daily living and meet the additional wartime service and financial requirements are eligible. This is an important benefit for those who qualify and can help ease the worries of how to pay for assisted living or the cost of memory care.
Related: Funding Sources for Senior Care and Housing
Consult a financial advisor
Meet with your advisor to discuss your current situation and what you want your future to look like. He or she can offer smart advice about how to move forward to achieve your financial goals while protecting your current assets. In addition, meeting with an elder law attorney will give you additional insight into insurance options, potential tax deductions, and other aspects of estate planning.
Develop a financial plan
A financial plan is an opportunity to really hone in on what you want in retirement. Your goals. Your long-held dreams. Your plan also should cover how you will handle ongoing financial duties such as paying bills, making investment decisions, preparing tax returns, and so on.
Numbers and documents can become a blur after a while. Drilling the information down into a document that offers you a specific direction makes it much easier to focus on what lies ahead, and how you will address future costs of senior living.
Senior living, the Lutheran Social Services of Central Ohio way
At LSS Senior Living, our goal is to offer seniors quality care and comfort in a friendly and warm environment that feels like home. We offer a continuum of services to lend a helping hand when you need them. Find out more about our communities:
Speak to an advisor today, we’re here to help. Learn more about assisted living, download a brochure.
