When it comes to important life decisions, the difference between meeting your goal and just dreaming about it is having a plan (and a budget). If you’ve thought about moving to a senior living community, you’ve probably wondered: Can I afford senior living? To help you make a more informed decision, we have some budgeting tips to help you figure out how to pay for senior living.
Budgeting for retirement
Once you give up your regular paycheck, the money you have is the money you have. So whether you’re still working (and saving) or retired and using savings, pension, investments, etc. for daily expenses, having a budget is important for planning. But remember, as your life changes, so will your expenses. That’s why it’s important to revisit your budget from time to time to make sure you’re on track. To help, here are 7 helpful budgeting tips:
- Stretch every dollar. A few simple strategies can help your retirement dollar go farther:
- Live below your means — Move to a smaller house, cut unnecessary expenses, or travel a little less. Investing your monthly savings can help your money grow.
- Get out of debt — Having debt can eat into your daily budget, eroding your financial security. Pay down debt as quickly as possible. Credit cards with no balance can be lifesavers if you have an emergency, so make this a goal.
- Balance your investments — A financial planner can help you decide on the right mix of conservative, safe investments and risky, high-reward investments.
- Home-grown money — Your home is likely one of your most valuable investments and selling it can help fund your retirement. If you’re able to invest the money, it can grow quickly.
- Assess your assets. Evaluate every form of current or potential income. How much is it now? How much growth, if any, can be expected? You should consider your:
- Social Security
- Retirement savings, including 401(k)s, IRAs, pensions and annuities
- Stocks and bonds
- Capital assets such as homes, cars, boats, art, real estate and businesses
- Long-term care insurance
- Life insurance
- Estimate your expenses. While work-related costs — transportation, dry cleaning and clothing — will likely go down after retirement, costs on travel, health care and taxes on retirement income may increase. Also, don’t forget the day-to-day expenses, including groceries, utilities, gas, lawn care, entertainment, and additions like home security. Budgeting for these types of expenses now can ensure you have money to cover these additional costs.
- Prepare for increased health care needs. Even if you’re healthy now, one important budgeting tip is to be prepared for unforeseen health problems. An unexpected health emergency like a dementia diagnosis, fall or other injury, or a disease or condition that requires constant care could be financially devastating.
- Get with the program: For those who qualify, there are a variety of government programs that can help cover your senior living expenses.
- Veterans Affairs pension — If you served during a period of conflict, meet minimal age or disability requirements, and fulfill certain income restrictions, you could qualify for monthly payments.
- Medicaid — This can also cover some of the costs of Assisted Living. To qualify for Medicaid, several requirements must be met, which vary from state to state.
- Local communities — Check to see if your state, county, or city offers discount programs and assistance for seniors, including housing assistance, energy assistance for low-income seniors, and food stamps.
- Bridge loan — This type of loan could give you the money you need to move into a community while you wait for your house to sell.
- Look for 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. To qualify for a senior tax break, you must:
- Be a U.S. citizen or resident alien. Someexceptions 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.
- Get outside help. Getting expert advice from a financial advisor can help you achieve your financial goals and save money.
The future starts now
To find a community in your area that fits your lifestyle and your budget, use our Find a Community tool.
Where You Live Matters is powered by the American Seniors Housing Association (ASHA), a respected voice in the senior housing industry. ASHA primarily focuses on legislative and regulatory advocacy, research, and educational opportunities and networking for senior living executives, so they can better understand the needs of older adults across the country.