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One of the most important parts of your retirement is making sure that you have the resources available to provide for your and your loved one’s healthcare as you age. While it may be most fun to think about all the adventures you’ll go on, or all the games of pickleball or golf you’ll play in your retirement, it’s equally if not more important to consider how you will provide for your healthcare and at-home comfort as you age. So while your first stop after retiring probably won’t be a senior living community, relocating to an area with high quality medical and senior care facilities can pay dividends and make the transition to long term care later in life so much easier should that become the right decision for you. And even for those who don’t have the need for more involved, long-term medical care, a senior living community can be an amazing living option for those who are looking to have all the chores and hassles of daily life completely handled for them. This is why it’s so important to consider whether you might one day consider living in a senior living community, and if so, whether you will be able to afford it.

Why move to a senior living community?

For many people there are two, sometimes related, reasons for choosing to move to a senior living community: (1) after years of maintaining a home they’re ready to kick back and relax and let someone else handle the burdens of housework like doing the laundry or mowing the lawn, or (2) they are interested in living somewhere with easy access to long term care options. 

The first option is easy to understand as even new homeowners can feel the stress of house maintenance. For many people, moving into a senior living community is not driven by a need for care but rather simply by the desire to have all of the housekeeping and cleaning handled by someone else so that they can make the most of their retirement years. 

For others, the move to a senior living community is a way to get access to long term care. While many people equate long term care with medical care, it can often take the form of helping with simple, daily tasks around the house. So for many people the choice to opt for some level of care simply allows them to continue to live their most active and engaged lives by making sure that all their needs are met. From daily things like linen service or a chef to cook your meals, to providing access to more professional medical care, a senior living facility can go a long way to taking the stress out of retirement. 

What is long term care?

Before understanding why so many people choose to move to a senior living community, it’s important to understand long term care. The National Institute on Aging defines long term care as “a variety of services designed to meet a person's health or personal care needs during a short or long period of time.” So while many people may associate the term “long term care” with medical care, it is often care more limited and less invasive. This is why at some point in their life, most adults will access some form of long term care even if it is just minimal daily assistance.

These services can be provided in a variety of locations by a variety of caregivers depending on an individual’s needs. Generally, people receive long term care either in their home or by moving into a nursing or senior living community. In either location, the most common type of care is concerned with routine daily activities like bathing, dressing, grooming, or moving around. Oftentimes when long term care is provided at home, particularly if it is for simpler tasks, it is provided by family members, although many people will opt to hire a caregiver to come to their home and assist as well. 

Depending on conditions, however, long term care might require more involved assistance to do things like get around town or buy groceries, and can even include certain aspects of medical assistance. For people requiring more intensive long term care, at-home care can still be an option however this often necessitates hiring professional assistance, sometimes on a full time basis, as family members are often ill-equipped to provide more advanced levels of care (particularly if there is a medical component to the care regimen). That’s why for many people with long term care needs, a senior living community is the best and easiest option.

How much does a senior living community cost?

As you can probably imagine, the cost of a senior living community is going to be determined by things like the location of the community, the level of amenities that the community provides, and the level and type of long term care that the community provides access to. Generally, the more luxurious a community’s amenities, as well as the more intensive its potential levels of care provided, the more expensive the monthly rate will be for the community. That being said, a recent survey by Genworth, a long term care insurance company, helps provide some ballpark figures to start thinking about a budget for a senior living community.

The survey indicated that the average monthly cost for “homemaker services,” in other words those household tasks that are difficult to accomplish alone, is roughly $4,000 a month. This is roughly equivalent to the monthly rate for assisted senior living, where a community provides social and other support services, but does not provide medical care. For in-home services that also provide health assistance (although short of true medical care) the cost will be slightly higher, averaging roughly $4,200 a month. For those with more advanced medical needs, a nursing or skilled care facility can cost between $7,000-$8,000 per month. These facilities offer a high level of care, often including 24/7 nursing assistance. While some senior living communities will have housing options that offer this higher level of care, often times this higher level of care is provided in a separate assisted living or memory care facility. 

While these statistics give a good baseline for judging the average monthly cost of living in a senior living community (or paying for analogous services to be provided at your home), these are only averages and so it is important for you to consider exactly what your own requirements are, as well as what the average monthly rates are for senior living communities in your chosen retirement destination. If you know where you want to, or likely will, end up for retirement it’s never too early to start planning for your long term care. 

How do most people pay for a senior living community?

While the prospect of paying for long term care might seem daunting, many people are pleasantly surprised when they realize how many funding options are available to them to pay for a senior housing community or long term care. While each source of funds could be the topic of its own blog post, the list below details some of the major sources that people use to fund their long term care.

‍Real Estate Transaction - One of the most common ways that seniors pay for long term care or a senior living community is through the sale of their house. If you are planning on moving into a senior living community, and therefore no longer have a need for your primary residence, a house sale can provide a huge infusion of funds to help cover the cost of senior living. However, a home sale isn’t the only way to unlock value from the equity in your house as many seniors, particularly those who plan to stay in their home and pay for long term care services to come to them, use a reverse mortgage to fund their long term care. A reverse mortgage is a type of home equity loan available to homeowners 62 or older, in which a lender pays the homeowner based on a percentage of their equity in the home.

‍Savings and Retirement Income - While it may seem obvious, another popular way to pay for long term care is through your accumulated retirement savings. From a rainy day bank fund, to stocks and bonds, people use a variety of methods to save up for their eventual long term care needs. In addition to these savings, many people use their social security or pension payments to help supplement or pay for their long term care. While it may not be the most surprising fact that people use their savings and retirement income to pay for their care, we think it’s important to call out this source of funds as it’s never too early to start putting away money for your retirement. Even small amounts of savings can pay big dividends down the line.

‍Benefits and/or insurance - Along with these more general categories of assets, there are also various programs and products designed specifically for providing financial assistance for your long term care. One very popular option is long term care insurance, which can cover a host of services that may not be covered by Medicare or Medicaid or some health insurance plans, such as home care, assisted living or memory care, or skilled nursing care. Long term care policies generally kick in after an assessment has determined that you need help with two or more daily activities, known as benefits triggers. While many people might know about long term care insurance, some might not know that it is possible to convert a life insurance policy into a long-term care benefits plan. In this scenario, an in-force life insurance policy is converted into a pre-funded account that disburses a monthly benefit for your long-term care needs. In addition to insurance policies, some government benefits programs will also help provide assistance with paying for long term care. ‍

How do I prepare to afford a senior living community?

There’s no time like the present to start planning for long term care, and in particular the possibility of moving to a senior living community. As with any time you are planning for a large life event, a great first step is to start gathering all your (or your loved ones) important financial documents so as to have a clear picture of your savings and finances. This should not only include the big items you might think of like bank account information or insurance policies, but should also (to the extent possible) track things like monthly bills and spending to make sure you have a good sense of how to budget for all your needs going forward. Once you’ve collected this information and have a better sense of your financial needs and constraints, sit down and begin to think about how the additional costs of senior living can fit into your current retirement budget. For many people, the best way to do this is by seeking the advice of a financial advisor or estate planning attorney, particularly one that specializes in planning for long term care. Contacting a financial advisor is a great first step for planning for your long term care needs. 

Sunbound is the best way to pay for senior living. If you want to learn more about how Sunbound can help make senior living more affordable for residents and easier to manage for communities, email us at info@sunboundhomes.com or request a demo here. Sunbound is on a mission to make senior living more affordable for everyone.