After retirement, it’s important to define your wants and needs. For many older adults, finding the way of life they desire that works for their budget can be a major challenge. Fortunately, retirement may be more affordable than you think. There are several senior living options available to seniors, and most offer several benefits when it comes to services, amenities, and wellness. It’s important to consider the total costs and how it compares to other housing options. In this article, we break down the monthly expenses of retirement communities and review financial tips to help you get started.
Entrance Fees In A Senior Living Community
According to a senior housing report from CBRE, almost two-thirds of senior living communities charge an entrance fee to their residents. The cost of move-in fees vary from community to community, from modest to extravagant. While entrance fees vary, all communities have one thing in common: joining a retirement community is a significant financial commitment. Older adults need to find the “sweet spot” between cost and quality of life.
Monthly Fees In A Senior Living Community
When you move into a senior living community, expenses like property taxes, home insurance, utilities, and maintenance are no longer concerns. These expenses are covered under a monthly service charge, which generally includes a meal plan, transportation, access to health and wellness facilities, vocational classes, shared community spaces, and much more.
Assisted Living and Independent Living communities typically have a monthly fee, which varies from community to community. Variables that play into the price include location, apartment size, and the services you’ll need.
To get a better picture of the prices you can expect, be sure to try our financial calculator. We developed this tool to determine your current and potential costs to help you make the best financial decision for your desired lifestyle.
Financial Tips for Senior Living Planning
When it comes to making financial plans for you or a loved one, many people are caught off guard by the unseen costs involved. No matter what your finances look like, planning for senior care is not something you should put off. Financing retirement living requires forethought, time, and preparation. Here are five helpful tips on financial planning for senior living.
Download The Complete Guide to Managing Elderly Healthcare Costs
One of the most impactful considerations for a senior’s quality of life is healthcare costs. Read our eBook, “The Complete Guide to Managing Elderly Healthcare Costs” for the financial insights you need to help you make an informed decision.
Download the Guide1. Talk To A Financial Advisor
Getting expert advice from a financial advisor can help you achieve your financial goals and save money. They are often responsible for creating financial plans such as savings, budgets, and tax strategies. If you have financial questions that require tough decisions like using reverse mortgages or selling a life insurance policy, we suggest contacting a financial advisor or senior care manager for more information.
2. VA Benefits, Bridge Loans, and Medicaid
Those who qualify for a Veterans Affairs pension, or who have documented physical or mental restrictions, may be eligible for an increase in monthly payments. To get these benefits, a veteran must have served during a period of conflict, meet minimal age or disability requirements, and fulfil certain income restrictions. In addition, surviving spouses must meet certain conditions as well.
Find more details on VA guidelines.
If seniors are having trouble securing the finances to move into a retirement community, bridge loans may be a solution. For example, if a senior is unable to wait for their house to sell before moving into an Assisted Living community for an urgent need, a bridge loan could make a quick transition possible.
Read more about bridge loans and retirement communities.
Medicaid can also help cover the costs associated with Assisted Living. To qualify for Medicaid, several requirements must be met, and these requirements vary from state to state. The costs attributed to skilled nursing and emergency response systems may also be covered. Room and board is not covered by Medicaid, which generally accounts for roughly half of the costs of Assisted Living.
Read more about Medicaid and eligibility requirements.
3. Understand Pricing For Your Level of Care
One of the first questions seniors and their families often ask is, “how much does senior living cost?” Understanding entrance rates, monthly fees, and the levels of care offered in a retirement community help to narrow your search and budget for the future. The cost of senior living varies, depending on the type of care you need, and personalized accommodations such as health care and assistance with activities of daily living (ADLs). While touring communities, it’s important to ask about the below costs in relation to your level of care:
- Community Fee: This covers the cost of the move-in process and preparing the apartment-home. For many Independent Living communities, this cost may also give residents priority access to higher levels of care offered.
- Care: For Assisted Living and Memory Care, care may be included in rent, or structured as an a la carte cost based on how often and what type of care is needed. Be sure to understand what is included and what may be an additional charge.
- Services: Services such as housekeeping and laundry are often, but not always included in rent. The services themselves along with the frequency may vary across different levels of care, so be sure to ask what is included in your monthly rent.
4. Consider Senior Tax Breaks
The Senior Tax Credit (also known as Credit for the Elderly or Disabled) is a federal policy that can be applied to your tax returns if you are 65 and up or have a disability. Retirees may find that what they file for changes because of new sources of income. To qualify for a senior tax break, applicants must:
- Be a U.S. citizen or resident alien, some exceptions apply depending on marriage laws.
- Be at least 65 or older by the end of the tax year or retired under permanent and total disability.
- Meet the income restrictions below (as of 2020):
To see updates on eligibility restrictions and tax credit terms, please visit the IRS publication website.
5. Take Advantage Of Free Resources
Gaining financial knowledge is important any age, especially when you’re retired. There are many great resources to help you take control of your financial planning.
At Senior Lifestyle, we’re committed to providing families and their loved ones with the right tools, resources and information to help you make informed financial decisions. Check out these handy guides, calculators and blog articles for additional details on senior finance.