According to the latest available data from Genworth, the yearly median rate of U.S. assisted living communities was $64,200 in 2023, a 1.4% increase from the previous year. Doing the math puts the median monthly rate at $5,350, which is a lot of money, especially for seniors without income-generating jobs.
The good news is that many savvy strategies can help make paying for assisted living more manageable for older adults (and their wallets). From bulking up personal savings to boosting retirement income and taking advantage of insurance benefits, these can all help cover senior living expenses.
So, join our caring team of experts at SummerHouse Alexandria, our assisted living community in Alexandria, LA, as we delve into these strategies and options.
Personal Retirement Savings
Personal retirement savings, which are common ways of funding senior care and assisted living services, can come from:
- Individual retirement accounts (IRAs)
- Employer-sponsored accounts (e.g. 401(k)s or 403(b)s)
- Thrift savings accounts
However, depending on how much seniors have saved, their savings may not be enough. According to an article published by Investopedia in December 2024, adults 65 to 74 had a median retirement account balance of $200,000. Conversely, it was only $130,000 for seniors aged 75 and over.
Given those figures, older adults shouldn’t rely solely on personal retirement savings to cover assisted living costs. They should explore other options and boost their retirement income through the following strategies.
Proper Budgeting
Proper budgeting allows seniors to determine where their money goes and areas they can adjust to avoid depleting their savings too quickly. It involves identifying all income sources, such as:
- Personal and retirement savings
- Interest on savings accounts
- Pensions
- Social Security
- Annuities
Next, seniors must create a comprehensive list of all their monthly expenses and deduct these from their net income. Examples of such expenditures are:
- Assisted living fees
- Medication
- Healthcare costs
- Personal care items
- Entertainment
After identifying all their expenses, older adults can determine which areas they can cut costs on. For example, they may consider downsizing when transitioning to an assisted living community and choosing a suite instead of a more spacious, one-bedroom or two-bedroom apartment home. They should also look for reputable assisted living communities offering discounts, such as special programs for military veterans.
Making Catch-Up Contributions
Older adults who still earn income can boost their retirement savings through catch-up contributions. By doing so, they can make up for missed investment opportunities.
For example, according to Smart Asset, adults 50 and older can contribute an extra $1,000 to their Roth IRAs. Beginning in 2025, employed adults 60 to 63 can also make a catch-up contribution of up to $5,250 to their SIMPLE IRAs.
Long-Term Care Insurance
Long-term care (LTC) insurance policies are private elder care payment options that cover senior living costs. They provide regular payments to beneficiaries or policyholders, allowing them to pay for expenses in an assisted living community. LTC insurance policies are more flexible than most government assistance programs, which often have stringent asset and income requirements.
LTC insurance policies can cover all or a portion of seniors’ assisted living expenses, helping them avoid:
- Selling assets
- Exhausting savings
- Tapping too much into life insurance living benefits
LTC insurance providers typically pay policyholders by cash or reimbursement. With a cash payment, policy owners receive a monthly lump sum, which they can use to pay their monthly assisted living expenses. On the other hand, a reimbursement pays the insured for the actual covered costs incurred up to their policy’s maximum monthly benefit.
Life Insurance
Some life insurance companies offer policies with LTC benefits, such as through “add-ons” like LTC riders. Others don’t directly pay for long-term care or assisted living services but offer cash-based living benefits, such as accelerated death benefits and life settlements.
LTC Riders
LTC riders are additional coverages policyholders can buy to gain access to a living benefit. With an LTC rider, seniors can tap a portion of their policy’s death benefit monthly to pay for long-term care expenditures, such as assisted living services. In most cases, policy owners can only “activate” LTC riders if they develop a medical need for help with ADLs.
Accelerated Death Benefit
An accelerated death benefit is an advanced withdrawal from a life insurance policy’s death benefit. It typically consists of a lump sum payment subtracted from the proceeds beneficiaries would otherwise receive when the policyholder passes. The insured can use the money to pay for long-term care expenses.
Life Settlement
A life settlement is a transaction in which policy owners can “sell” their plans. In this case, they exchange their policy’s current value for cash. They can then use the money (minus tax) for personal care expenditures, such as paying for assisted living.
Government Assistance Programs
In Louisiana, several government programs provide financial assistance for seniors who need help with activities of daily living (ADLs). Examples include:
- The Long-Term Personal Care Services Program
- The Community Choices Waiver
- Program of All-Inclusive Care for the Elderly (PACE)
The eligibility factors vary, but most government programs require applicants to show they need help with at least one ADL and meet income requirements.
Care Annuity
Lastly, seniors in Alexandria, LA, can use a care annuity, another insurance product. It’s a contract in which the policyholder makes a series of payments or a single lump sum payment to the insurance provider. Once the need for long-term care arises or they reach the age at which their annuity must start paying out, they’ll receive regular payments.
In some cases, care annuity providers can pay the policyholders’ long-term care providers directly. In this setting, the payments are usually tax-free.
Simplify Paying for Assisted Living in Alexandria, LA
With proper budgeting and combining several financial sources, such as personal retirement savings, LTC insurance, or life insurance benefits, paying for assisted living can be much more manageable for seniors.
At SummerHouse Alexandria, our assisted living community in Alexandria, LA, we offer quality accommodations to our residents, including studio, one-bedroom, and two-bedroom apartments, letting them enjoy privacy while staying on top of their budget. We combine these with highly tailored personal care, supportive services, delicious meals, and engaging events and activities.
Contact us today to schedule your tour and discover why our senior living community should be your or your older loved one’s next beautiful abode!
