Deciding to move into an assisted living facility is a big step that requires careful financial planning. With monthly fees averaging over $4,000 per month, it’s crucial to budget and save enough to cover these ongoing expenses. Use these tips to financially prepare for assisted living costs:
Research Average Costs in Your Area
The first step is researching the average monthly fees for assisted living facilities in your area. Costs can vary widely depending on the services offered, room type, location, and more. Some facilities charge extra for meals, activities, laundry service, and other amenities. Be sure to factor in all the potential fees when budgeting. You may also have to pay a community fee or deposit when moving in.
Get Quotes from Facilities You’re Considering
Once you’ve identified a few potential assisted living facilities, inquire about their current monthly rates. Be sure to get fee sheets that outline what’s included and what costs extra. Also, ask if they expect fees to increase yearly and by how much. Comparing quotes will give you a realistic budget number to work towards.
Look into Long-Term Care Insurance
If you have long-term care insurance, check if any portion of assisted living costs are covered. Policies vary widely, with some covering a certain dollar amount per day for assisted living. Others only cover skilled nursing or in-home care. If you don’t have a policy yet, it likely makes sense to get one before needing assisted living to maximize benefits.
Evaluate Your Assets and Income Sources
Take stock of assets and income sources that can help pay for assisted living. Will you pay out-of-pocket from your retirement savings and investments? Or will you use Social Security, a pension, or other regular income? If you will be selling your home, factor in the equity you’ll free up.
Also, evaluate assets like life insurance or annuity contracts that could potentially be converted into income.
Apply for Medicaid if Applicable
Medicaid can cover assisted living, but generally only if you meet functional impairment and financial eligibility criteria. Requirements vary by state. Veterans or surviving spouses may also be eligible for Veterans Aid & Attendance benefits that can help pay assisted living costs. Looking into these options proactively can significantly reduce out-of-pocket expenses.
Set Up Automatic Transfers to Your Savings
Once you know how much-assisted living will realistically cost each month, set up automatic transfers from your checking account or other funds to an interest-bearing savings account. This will help you gradually build up the funds needed to cover future expenses. Online banks tend to offer higher interest rates on savings accounts.
Downsize and Simplify Finances
To free up more cash flow for assisted living expenses, downsize your home and consolidate financial accounts.
This reduces expenses like property taxes, insurance, utilities, and maintenance costs. Closing unnecessary credit cards and bank accounts also simplifies managing your finances as you age.
Explore In-Home Care Services
Some seniors start with in-home care to allow them to live at home longer before transitioning to assisted living. Non-medical services from a home care provider in Rockville, MD, like meal prep, housekeeping, transportation and companionship, run at $20-$40 per hour on average. This can still cost significantly less than assisted living each month, while providing needed support.
Communicate Plans with Family
Keep close family members informed about your assisted living research and budget. They may be able to contribute or help evaluate options. Involving them also avoids surprises and can give them peace of mind, knowing you have a financial plan in place.
Budgeting for assisted living requires assessing income sources, assets, insurance coverage, and other financial resources. But with careful planning, you can develop an effective plan to cover future costs. Reach out to a financial advisor if you need help evaluating how to tap retirement funds or other assets most efficiently.
