Senior Guidance

Affordable Assisted Living



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Your Guide to Affordable Assisted Living

Searching for quality senior living options can be stressful, but finding affordable assisted living solutions near you isn’t impossible.  The frustrating part of finding affordable assisted living is that it is need based.  You’ll only be searching for it if you need it, but then you’ll really need it and will have to choose from what’s available.

No one wants to think of their future selves, in retirement.  When we’re young we can’t imagine not being able to take care of ourselves.  Buttons and zippers don’t phase us.  Holding a fork or spoon are basic skills that we’re not even conscious of.  Middle-age might bring some realization that we’re not impervious and we start to see our invincibility fade.  Millions of seniors are facing the fact that they need help with basic daily tasks that used to be easy and they can no longer live alone.  They need to find affordable assisted living help.

Every year, Lincoln Financial runs a study referred to as What Care Costs.  This study finds the average costs based on a 1 bedroom, assisted living unit.  The most recent study found a national average cost of care of $54,720, or $4,560.

Many sources cite the Genworth Financial Cost of Care survey, but the significant difference is that Genworth uses the median cost rather than the average.  Genworth finds the national median cost of assisted living was $45,000 a year, or $3,750 per month.  This is a difference of almost $10,000 so it’s important to realize the distinction in the two reports.

Whether the national average cost of care is considered affordable, assisted living is highly subjective and dependent on individual circumstances.

What Factors Determine Cost of Assisted Living?

Just like any household budget, there are factors that affect the cost of affordable assisted living.  You are armed and forewarned when you are aware of these factors.

Services.  Finding affordable assisted living is affected by what services are required.  Assisted living provides daily personal care, such as dressing, grooming, eating, help with taking medication, etc.  If you can search for facilities offering services to meet your needs, you will find more competitive costs.  Knowing what services are needed or will be needed is perhaps the most important key to finding affordable assisted living.

Location.  Geography affects the costs of living and the costs of providing needed services.  New Jersey is the most expensive state for assisted living, with costs at $79,000+ per year, based on the Lincoln Financial’s recent study.  That’s roughly 60% higher than the national average.  Then there’s also Missouri who reports the lowest nationwide cost of assisted living at $32,400 per year.  Services and facilities in these two states might be comparable, but the costs are significantly different.  Florida is below the national average cost at $37,000 per year.

Inflation.  Inflation might not be an obvious factor, but it plays a significant role in forecasting costs and projections.  Inflation has been low in recent years, but historically it has averaged around 3%.  Miscalculating its effect can affect the funds available that would make for affordable assisted living.

Wants vs. Needs in Affordable Assisted Living

We want as much as we can get for our dollars.  Having a realistic list of wants and needs will make the search for affordable assisted living more effective.  A need is a necessity that you can’t live without.  A want would be nice to have, but isn’t absolutely necessary.

An honest discussion with a doctor or senior advisor will help differentiate between needs and wants.  Establish what is the most important criteria on that list and then search and compare facilities that offer those services.

Luxury vs. “Regular” Affordable Assisted Living

There are always ways of grading quality.  Luxury assisted living facilities can be identified by the level of service provided.  The types of services provided might be similar, but luxury assisted living facilities will strive to provide a higher level of service.

A regular or typical assisted living facility will likely provide personal enrichment activities.  A luxury assisted living facility will provide a higher quality and higher number of activities.  Instead of a social hour, a luxury assisted living facility would likely provide a higher quality learning experience to stimulate thinking and interaction.

Any assisted living facility should have a well-maintained building in good repair.  A luxury assisted living facility might use décor to enhance the atmosphere to benefit the residents.  Some modern facilities install automatic dimming hallway lights that adjust with the time of day to either invigorate or calm residents to prepare for bed.  Bright colors or use of textures and patterns help seniors sense their surroundings.

The perks of luxury assisted living facilities come with a higher price tag.  A luxury assisted living facility could cost $10,000 per month or more.  A low number of seniors can afford this cost.  Affordable luxury can be found by seeking the services that provide the most value to you, allowing you to live in an environment where you are comfortable and that you enjoy, yet one which you can afford.

Can You Afford Assisted Living?

Many people ask: “Can I afford assisted living?” What makes costs affordable is the impact on a budget.  The more money that is available, the less expensive things seem because they have less impact on the bottom line.

The average American monthly mortgage payment is just under $1,100 per month.  With a national average of $4,550+ per month for assisted living costs, it’s easy to see the dilemma that many seniors and their families are facing.  How does anyone consider that affordable assisted living?

The typical assisted living resident is an 87-year-old female who is relatively independent.  She may not have adult children to assist her or they don’t live in the same area.  She typically needs help with 2-3 tasks per day.  These might include dressing, grooming, eating, or helping take medication.

The age range most likely to be entering an assisted living facility is 75 to 84 years of age.  By this time, many people have saved up for retirement and have sufficient funds available to afford assisted living. However, there is a growing number of residents less than 65 years of age.  The age of a senior entering assisted living is very individual and will depend greatly on health history and previous lifestyle.  Staying healthy earlier in life can reap benefits as we age.

35% of assisted living residents are residents for 1 year or longer, so make sure you have enough funds to afford assisted living on a longer-term basis.  16% are residents for 3 years or longer.  The average length of stay in an assisted living facility is 24 months.

The U.S. Department of Housing and Urban Development (HUD) concludes that a household paying more than 30% of their income towards housing is facing a hardship.  This applies to home ownership as well as renters.

Given that 30% threshold, where do you stand in your monthly budget?  Some quick math tells us that for the assisted living monthly fees at $4,560 to be 30% of your income, then you would need a monthly income of $15,500.  If you have sufficient retirement savings or annuities / pension or other income that can get you to that level, then finding affordable assisted living facilities would not be a problem.

HUD has public housing programs to help seniors, but these programs are primarily focused on independent seniors.  It is unlikely that a HUD program will help pay the costs of assisted living.

Effective Retirement planning plays a crucial part in ensuring that you have access to affordable assisted living if it’s needed.  Starting early allows investments and savings to compound for a longer amount of time.  Pensions are generally being phased out in favor of defined contribution plans, but some lucky seniors might still receive pensions.  Modern financial investment vehicles that are common are 401Ks, IRAs, brokerage accounts, annuities, CDs, and personal savings.

Many seniors choose to downsize from the family home that has become too large to maintain and not fully utilized by empty-nesters.  Often, that family home is owned without a mortgage or has a very low mortgage.  Selling that home provides an influx of money that can be used to subsidize a retirement plan.

Do your homework.  Make the list of needed services that are necessary and the wanted services that you would like to find in the assisted living facility.  Do the research to find the affordable assisted living facility that you would prefer.  There isn’t always an opening.  Put yourself on a waiting list and stay up-to-date with the facility if need be.

In construction there’s a saying: “Measure twice, cut once.” Make sure that you feel confident you’ve found affordable assisted living before you sign the contract and move in.  Moving in and changing your life to get settled only to find out that you’ve made a mistake can be very costly.  No one wants to uproot their life and pay unnecessary fees.

As with many high-priced items, the stated price isn’t always the final price.  Ask the facility if there are incentives available.  Negotiation of medical costs might not be available due to Medicare guidelines, but payment terms or other services might be negotiable.

Compare pricing structures to find the better value.  A la carte pricing for assisted living services might be better than all-inclusive.  A long list of available services looks attractive, but they provide no value if you have no use for those services.

Be flexible in your choice of locations when searching for affordable assisted living facilities.  Prices vary by geography, so some areas of the country are more affordable than others.  Parts of different states and cities are more affordable than others.  Suburbs tend to have more affordable assisted living facilities than urban settings.

Long-term care insurance can help you afford assisted living.  This is insurance that typically gets purchased in the early 50s.  If you wait too long the premiums can make this insurance cost prohibitive.  Choose your policy carefully.  Some policies limit the type of facility covered or type of services covered.

Studies show that seniors become more isolated with age and can become reclusive.  Maybe having a roommate can help you find an affordable assisted living solution.  Roommates can help with social interaction, but also help reduce the need to pay for daily assistive services, possibly reducing the cost of services.  Having a roommate could mean splitting costs of the unit as well as household needs.

Don’t forget about VA benefits for assisted living that might be available.  The VA provides benefits that allows for assistive services.  These services can be provided regardless of the household.

Every state has an agency on aging.  These agencies have staff available to consult and assist you in your search for affordable senior living resources.  They can even help complete applications for assistance and make recommendations on seeking additional help.

Perhaps the most significant thing you can do to find affordable assisted living is to take care of your health now.  Old age always seems so far away, but every day we have the power to reinforce our health.  Daily healthy habits that you establish at any age will save you money and headaches later.  Take care of your body so it can take care of you.

Most people know someone who has been diagnosed with dementia or Alzheimers.  It is heartbreaking to watch, and to live through.  Cognitive decline actually starts in our 30s, but it doesn’t always become evident until our senior years.  Keeping our minds healthy by keeping them engaged can prevent or delay these devastating conditions.  Simple activities such as maintaining good social interaction or learning new skills can be useful as well as preventative.  Learning a new language or learning to play an instrument are particularly favored as being helpful.

Once again, we see proof that prevention is the best medicine.  Of course, this might come too late for someone who is already in need of finding affordable assisted living.  Searching for affordable assisted living can be daunting, but it’s not impossible.

  • Remember to make your list of the services that you need.  Discuss with your doctor what is needed now and is likely to be needed in the future.  Choose a facility that can adapt to fulfill those future senior living needs to avoid having to move again.
  • This is still a home and you should be comfortable and enjoy where you live.  Once you’ve met your list of needs, try to include some wants that are important to you.
  • Are you entitled to any VA benefits that would help lower costs?
  • Talk to people.  Do you know anyone who has gone through this situation recently, and can them recommend an assisted living facility?
  • State agencies for the aging exist to help residents find affordable senior housing.  Find your resources.  They are there to help you.