If you are planning to move to an assisted living community, you may be concerned about how to prepare financially. While it may seem overwhelming, many adults find that their monthly expenses are simplified after they move. This is because most communities include meals, utilities, maintenance, housekeeping, and other basic amenities in their monthly rate.
In addition, since most senior living communities provide transportation services, many residents are able to eliminate or greatly reduce auto-related expenses like insurance, gas, and maintenance. Other costs such as homeowner’s insurance, home maintenance costs, and property taxes may also be able to be removed from your budget.
However, every assisted living community is different. Here are some financial factors to consider and financing options to explore as you plan for your future care needs.
Financial Factors to Consider
As you begin evaluating the financial impact of your move, consider not only what expenses you will be responsible for, but also what costs you might be able to eliminate. Not only will it make it easier to estimate your expenses, but it will also help you judge the value of what you are paying for.
Monthly Rates and Additional Costs
The monthly rates at most senior living communities will include your room and meals, as well as recreation, housekeeping, and maintenance. Some communities do offer additional amenities, which may not be included in the monthly rate. While searching for an assisted living community, be sure to ask for a list of what amenities and services are included, and what is considered an additional cost. You may also want to ask how those charges are handled.
Discuss with each community you are considering the potential for rate changes, and how they are structured. Depending on the amount and your budget, you may need to find other areas for cost savings. It’s important to ask about potential caps on rate changes and understand the full picture of how rates are determined before committing to a contract.
Contracts and Financial Paperwork
Few of us take pleasure in reading legal contracts, but it’s important that you understand the terms and conditions of the contract you are signing with an assisted living community prior to moving in. Treat this as you would any other major financial decision, and consult with a financial planner or legal professional if you need assistance.
Potential Tax Deductions
Another financial consideration is the potential tax deduction associated with moving into an assisted living community. A qualified tax professional can help you determine your eligibility. Tax laws change frequently, and deductions like these - if you qualify for them - may help make your new living arrangement more financially comfortable.
Financing Options for Assisted Living
While we all hope to have enough saved for retirement to attend to our care needs, the reality is that most older adults finance their assisted living lifestyle through a combination of methods.
In addition to savings, some of these financial options include:
- Sale of a home or other real estate investments. For many seniors, their homes are their most valuable asset. Selling your home may provide a majority of the funds needed for long-term care. Each situation is unique, so it is a good idea to consult with an eldercare attorney or your real estate agent first.
- Long-term care insurance. Long-term care insurance is designed to cover your expenses in the event that you need care at home or in an assisted living community. However, like any insurance policy, there may be limiting factors. The best time to invest in a policy like this is well before you need it.
- Pensions, annuities, and veterans benefits. Additional financing options may include various pension plans and annuities. Veterans benefits can also be used to pay for assisted living care for both veterans and their spouses in certain circumstances.
When it comes to financially planning for the next chapter of your life, seeking the expertise of a wealth advisor or personal financial manager may be beneficial. These professionals can help you explore potential additional options for your unique financial situation.
The Beginner’s Guide to Assisted Living
If you’ve started evaluating assisted living options for yourself or a loved one but aren’t quite sure where to start, check out our beginner’s guide to assisted living.