Budgeting Essentials for Assisted Senior Living
The average cost of assisted living in Iowa is $5,200 per month. For seniors who are living in low-cost housing or who have paid off their mortgage, this number can seem overwhelming.
There are many different options for covering assisted living costs regardless of how much money you made before retirement or the size of your savings account. We're here to break down the costs of assisted living and your funding options.
Read on to learn how to budget for assisted senior living. This guide will prepare you and your family to choose the right community and financially access the care you need.
What Do Assisted Living Costs Include?
First, let's discuss what that average lump sum covers. Believe it or not, assisted living makes budgeting easier because many life expenses are rolled into one. For example, you may not need to estimate the cost of monthly groceries if you opt for a three-meal plan through your community.
While assisted living costs and amenities vary, these costs tend to include:
- Private or semi-private housing
- Utilities
- Meals
- Assistance with ADLs
- Medical support
- Transportation services
- Housekeeping and maintenance
- Organized activities and community outings
- Health and fitness programs
When you move into an assisted living community, your monthly payments cover far more than housing. In a great community, staff members work hard to create enriching experiences and provide desirable amenities on top of day-to-day care.
How to Budget for Assisted Senior Living
For many seniors, transitioning to assisted living can come with a shift in living expenses. With the help of your family, you can start budgeting now to make this transition easier.
Estimate Costs
The first step in any budgeting plan is to estimate how much money you'll realistically need. Don't forget to include any medical debt in your budget. While a state average gives you a general sense of assisted living costs, you can get more accurate estimates by contacting individual assisted living communities.
Ask for a breakdown of required and optional costs. For example, some communities may require residents to pay for meal plans whether they use them or not, while others may allow residents to opt into the meal program as desired.
Don't hesitate to request estimates from two or three communities.
Work with an Estate Planner
As you're gathering your estimates, it's also a good time to assess your current financial situation. Estate planners can help you consider assets and income sources you may otherwise overlook. They can also help you prepare important documents like your will and designate your power of attorney.
If you let your estate planner know that you're preparing to transition to assisted living, they can help you approach taxes differently. There are tax deductions and credits available for medical expenses and assisted living costs.
Finally, an estate planner can ensure that your family knows what to do if you become incapacitated, which can alleviate complications around financing and decision-making.
Consider Tiered Care Communities
For many seniors, the first tier of assisted living is not the final stop. Many residents enjoy several years in private living quarters with basic assistance with ADLs, housekeeping, and medication management. Eventually, however, they need increased levels of care, whether to manage their physical or mental health.
Factoring in potential increases in care can and should impact your budgeting. When you select a community that has built-in levels of care, you can get a much more accurate sense of what that increase would cost.
Funding Sources for Assisted Living
Your checking account is far from the only source of financing you can use to cover the cost of assisted living. Here are some of the most common funding sources used by assisted living residents.
Retirement Savings
Personal savings and retirement income are the most common funding sources seniors use for assisted living. This includes:
- Savings accounts
- Pensions
- Social security
- Retirement accounts like ROTH IRAs or 401(k)s
To make financial management of retirement savings easier, talk to your estate planner. Together, you can set up trust funds that dispense certain amounts of money from your savings each month.
This is also a good time to look at the growth of any stocks or bonds you have. Once again, an estate planner can help you to sell and liquidate all or part of your investments.
Certain Types of Insurance
Some types of insurance can help cover the cost of assisted living. The easiest type of insurance to use in this situation is long-term care insurance. Long-term care insurance is designed for things like assisted living, nursing homes, and hospice care.
Many long-term care insurance plans are non-transferable if you don't use them. Alternatively, you may have a life insurance plan with a long-term care rider.
Many incoming residents have questions about Medicare and Medicaid. Generally speaking, Medicare does not cover the cost of assisted living. Some residents who qualify for Medicaid can use this government assistance to cover some or all costs associated with long-term care.
Additional Assets
Many seniors are able to sell assets they'll no longer need after moving to an assisted living community. Examples include:
- Real estate
- Businesses
- Cars, boats, and other motor vehicles
- Furniture and valuable collections
Homes are the number one asset residents can sell to cover a large portion of assisted living costs. The current average home value in Iowa is $217,641. This amount can cover more than three years of assisted living costs.
Make sure to name any beneficiaries of your assets before you start the selling process. This can protect the items you want to pass down from getting sold.
Learn More About Fairfield Assisted Living Costs
Assisted living communities deliver quality care and enrichment on a daily basis. For many seniors, finances are the only thing standing in their way of making the transition. Use this guide to learn how to budget for assisted senior living.
If you're looking for assisted living in Fairfield, Addington Place of Fairfield is a great option with tiered levels of care. We take a holistic approach to senior living with a great activity calendar, health and wellness program, and more. Contact us to schedule a tour and learn more about the quality and cost of living here at Addington Place.