Costs of Assisted Living: Financial Planning for Seniors

Statistics show that seven out of ten seniors will require some sort of long-term care. At The Mission at Agua Fria Senior Living, we offer an affordable assisted living lifestyle that inspires our residents and ensures they live well. Here are some facts and tips on how to plan for assisted living costs and ways you might use (or save) to pay for it. 

How Much Do You Need?

Here’s the great part: you need a lot less money than you think. The Genworth Cost of Care Survey taken in 2021 says that the average cost of assisted living is $4500 and varies depending on where you live. 

We’re living longer and that’s a great thing! While many choose to retire at 65 or earlier, you might opt to do a ‘down-size’ on your career instead. Consider doing part-time consulting in your current field or finding a new gig you enjoy to tuck away extra money. There are even websites specific to hiring older, experienced adults, even a ‘rent-a-grandma’ site for childcare! Even if you can’t return to the workforce, there’s plenty that you can do to save and even earn more in retirement. 

Save and Earn in Retirement 

If you’ve spent the time maximizing your 401k contributions, invested wisely, or live on a comfortable pension income, you might not be worried about assisted living costs. A good financial advisor will help you reach your goals for retirement, save money for assisted living, and advise you on tax implications for future investments and strategies. But unexpected medical and other expenses might dip into those reserves, and there are options.

If you have already retired and are wondering what else you can do, financial planning for seniors is very different from when you were working. Any investments made now should be in the low-risk categories: bonds, certificates of deposit (CDs), dividend-paying stocks, preferred shares, high-yield savings accounts, and annuities. Investing some of your nest egg should be done with trusted financial institutions and advisors.   

Another way to save is in your lifestyle. Consider downsizing, especially if you own your home. Moving to a smaller place and renting out your home might be a great income source. Check with your local property management companies to see the average rents in your area to see if this is a good fit for you.

Several programs are available to help seniors save money on anything from medications to food and housing. The National Council on Aging provides a free website called Benefits Check-Up, which allows you to search by state for programs available to seniors. There are ways to reduce costs, like utilities, rent, real estate taxes, legal services, and even transportation programs. Some are income-qualified, and some are age-qualified, but seeing where you can save doesn’t hurt.

Organizations like AARP are one way to get discounts on travel, food, and dining, but they also provide helpful online tools for budgeting, saving, and investing. If you’re a member of a credit union, trade, or alumni association, many discounts are often offered for members. Joining the local senior center is also a great way to connect to local (often free) financial and other resources that can help you save money. 

Alternative Ways to Fund Assisted Living

Long Term Care Insurance is a policy that covers long-term care for around three years, depending on the policy and payouts. These policies can be pricey depending on your age and health conditions. The Association for Long-Term Care Insurance provides a lot of free information on their website on how to get good quotes and the different types of policies.

Another option is to sell your life insurance policy to a Life Settlement company. These companies buy life insurance policies at a smaller amount than the payout.  Health, policyholders’ age, and payout amount largely determine whether or not a life insurance policy can be sold. 

Reverse mortgages are another option when finding ways to pay for assisted living, allowing you to keep your home while taking out some of the home’s equity. The Federal Trade Commission Consumer Advice page outlines different implications and family considerations. 

Financial Assistance Options

Several financial assistance options are available to seniors to help pay for assisted living. If you are a veteran or surviving spouse of a veteran, you may qualify for the Aid and Attendance Pension benefit, which helps pay for the cost of assisted living. Connecting with the Veterans Administration is the best way to determine your qualifications. 

Here in Arizona, you could qualify for the program funded partially by Medicaid called the Arizona Long-Term Care System (ALTCS). This income-driven program helps Arizona residents pay for assisted living. There are several qualifications, and depending on your situation, your home and other resources may not count against you in applying/ for this benefit. The resource guide on their website tells you how to apply. The Mission at Agua Fria Senior Living offers income-based financial assistance as well. Our Community Benefits Advocates can walk you through the eligibility process. If you need assistance with your daily activities of living and make less than $3,095 per month, you will most likely qualify. Come see what we offer by contacting us for a tour. Our communities are built around the idea that senior living can be affordable and a lot of fun!