Paying for Assisted Living: How to Plan and Manage Costs

Assisted living is an incredible opportunity for those who need help with daily activities but don't require a nursing home. This additional assistance increases with age, making assisted living a necessity.

Paying for assisted living can be challenging for families of loved ones, which makes financial planning for seniors an absolute must. By preparing for these costs ahead of time, assisted living expenses can be effectively managed. Here's what you need to know about planning for assisted living so you're prepared in advance.

Understand the Cost of Assisted Living

Assisted living expenses are affected by several factors. This includes:

Location

Depending on where the assisted living community is located, the price will reflect this. Rural areas might have more affordable options compared to urban locations.

Level of Care

What type of care do you or your loved ones require? This all plays a role in the overall cost of assisted living, especially if mobility assistance is required.

Amenities and Services

Not all assisted living communities offer the same level of services and amenities. Depending on the available recreational and dining programs, the cost may be higher. Always ask about programs for Veterans to offset any fees.

Since the cost of assisted living varies from one location to the next, always contact a community ahead of time and ask for a tour and available pricing. You can also visit available floor plans to see what each dwelling looks like in advance as part of financial planning for seniors.

Start Planning Early

Since senior care costs can be quite expensive, it's wise to prepare in advance to ease a financial burden down the road. To help plan for assisted living, be sure to follow these steps.

Begin Saving Early

As soon as you can put money aside for assisted living, start saving. This helps down the road.

Research Different Types of Available Care

Assisted living isn't a one-size-fits-all, which is why you need to understand what's available and how this affects cost. Know what you or your loved ones need and save for this type of community.

Consider Purchasing Long-Term Care Insurance

You may be able to purchase long-term care insurance to help offset the cost of assisted living. Speak with a trusted insurance agent to discuss what's available, the cost, and what it covers.

If you're looking into private insurance policies, always weigh the pros and cons since they can be expensive.

Explore Financial Options

If you don't want insurance or didn't save early, consider other means of paying for assisted living. This includes private savings and more.

Private Savings

Several different types of private savings accounts can help with saving for retirement community pricing. These accounts include retirement funds, assets, personal savings accounts, and more.

Consider the following accounts:

Retirement Accounts

These include 401(k)s, IRAs, and any other type of retirement account you might pay into. Just keep in mind that if you access certain accounts before a specific age, you may have to pay steep penalties.

Personal Savings

You might be able to use your personal savings for assisted living if you've been diligent about putting money aside. Work with a financial planner to create a savings plan that works for your unique needs.

Veterans' Benefits

Veterans may be able to get assisted living aid. This helps with paying for long-term care if they apply through the Department of Veterans Affairs (VA). The VA can help with long-term care such as assisted living.

Here's how they help:

Aid and Attendance

Veterans and their spouses may benefit from help with daily activities. This type of aid may help with the cost of assisted living so long as the Veteran and their spouse meet specific eligibility requirements.

Housebound Benefits

If a Veteran is homebound, they may be able to qualify for this benefit. It might be able to offset the cost of assisted living.

Long-Term Care Insurance

As previously mentioned, long-term care insurance is another option if you or your loved one need assisted living. This insurance can pay for all of assisted living or only part of it, depending on the type of plan you purchase.

Premiums and Coverage

Premiums can be expensive, which is why you need to consider what policy works best for your needs and your budget. You also need to find out what each policy pays.

Waiting Periods

Unfortunately, a lot of long-term care insurance plans have long wait periods. Always understand the terms of each policy before applying.

Life Insurance

Life insurance policies can help offset the cost of assisted living. However, this depends on the type of policy you have.

Life Settlements: Policymakers offer these types of settlement options when a policyholder sells their life insurance policy for payment in one lump sum.
Early Access of Benefits: There are instances where life insurance policies will let policyholders access some of their life insurance funds while alive if it's for long-term care.

Manage Assisted Living Costs

Now that you understand some of the options for paying for assisted living, it's time to manage these costs. Focus on the following:

Compare Facilities

Not all assisted living homes are priced the same. The best thing you can do is shop around to see what communities you enjoy and compare pricing. Don't just focus on monthly fees but what additional care fees are extra.

Budget Carefully

Create a budget ahead of time, and be sure to include room and board, food, and anything else you might pay for. This also includes personal care, medical budgeting, amenities, and more.

Is There Shared Housing Available?

Depending on where you look, some assisted living communities might have shared living available for their residents. This is an excellent way of reducing fees while also helping seniors find companionship.