Financial Planning Considerations When Transitioning to Assisted Living

Why Do Seniors Moving to Assisted Living Need to Be Financially Proactive?

Planning ahead and being financially proactive about any major life change can help ensure a more seamless transition and support long-term stability in your new life season. Some reasons older adults may want to plan ahead and think carefully through the financial factors of a move to assisted living include:

• Assisted living can be a significant cost.
• Many day-to-day needs are covered, which can mean significant changes to how you budget.
• Inflation could lead to increasing costs in general.
• It’s important to have a plan to help cover unplanned and emergency costs.
• A proactive approach helps you make the best use of your assets and any financial assistance that might be available to you.
• Long-term planning allows you to create care contingencies for various life and health scenarios and plan to cover them financially.

What Are Some Common Financial Considerations When Moving to Assisted Living?

The financial factors you need to consider depend on your individual situation, preferences, income and assets. Working with a financial planner — or a professional who’s experienced in long-term care planning — can ensure you consider the most relevant factors for you. However, some common considerations to include in your planning are summarized below.

Understanding Assisted Living Costs and What’s Included

Start by looking at assisted living community options. Think about what type of community you want to live in and what amenities and activities are most important to you. For example, if you want to be able to make friends with other residents and participate in regular social activities, you may want to prioritize assisted living communities with active social calendars.

Once you have a list of potential communities, you can visit them and start asking about costs. Consider what’s included in the cost so you have a comprehensive idea of how those fees might impact your overall budget. If what you pay for the month covers three meals, housekeeping, utilities, cable, Wi-Fi and social activities, for example, you might be able to reduce regular spending substantially to cover assisted living costs.

Asking About Payment Options

Find out how payments are structured so you know how much money you need to come up with and when. Then, consider how you can fund your move to assisted living. Some options include:

• Utilizing long-term care insurance coverage, if applicable
• Selling your home and using proceeds to fund months or years of assisted living
• Dipping into savings or retirement funds
• Applying for financial assistance if applicable

Planning for Potential Short- and Long-Term Income Sources

While your assisted living costs may cover a lot of your day-to-day needs, they won’t cover everything. Think about continued income sources to cover other needs and wants. Social Security benefits, proceeds from retirement funds or pension plans and other standard retirement income are common income sources. Others include annuity payments and funds from side gigs, such as selling handmade crafts.

Creating a Realistic Budget

Once you decide on an assisted living community that’s right for you, work on a realistic budget. Consider what assets you’ll use to cover the cost of assisted living and what income and assets you have left. Try to set aside savings for unexpected expenses and needs as well as enough to cover day-to-day items and services that aren’t included in your assisted living arrangement.

It may be tempting to stretch boundaries when creating a budget. For example, you might see that you spend $100 a month on entertainment and decide you can cut that down to $15 a month. While reducing your entertainment budget may make sense when moving to assisted living — you can replace current entertainment options with community activities, for instance — be realistic about whether such a drastic cut is something you can support.

When making your budget, try to balance an active, vibrant and enjoyable lifestyle with a logical understanding of financial limitations you may need to set for yourself.

Understanding the Impact of Any Insurance Coverage

Medical insurance doesn’t typically cover assisted living costs. However, certain medical care provided within an assisted living setting might be covered by Medicare, Medicaid and other insurance plans. Long-term care insurance may also help cover the cost of medically necessary services.

Understanding your benefits is a critical part of planning financially for a move to assisted living. If you aren’t sure how your various insurance policies might impact costs, call your benefits coordinator or talk to a long-term care planning professional.You can also reach out to the staff at the communities under the Bethesda Senior Living Communities umbrella to learn more about our services and how to plan for a move into one of our locations.