The Average Cost of Senior Living: Can You Afford It?

Depending on your location, living in an independent living community can cost from $1,500 to $4,000 a month, and seniors residing in assisted living facilities have a monthly average cost ranging from $3,500 to $10,500 a month. The average cost of senior living varies by state and region, but expenses are going up across the board for the basics seniors need every month. These expenses include rent, food, medication, and transportation costs. Add to that fees for typical utilities, such as gas and electric, and the cost of living for seniors quickly mounts.

According to a recent study, a couple retiring today will need about $285,000 to cover expected medical expenses during their retirement. This is coupled with added living expenses and costs associated with housing and other necessary costs of living. Many agencies that provided some relief for seniors are cutting services. This means seniors have to find alternative services or absorb costs themselves. This often requires adjusting monthly budgets and cutting back on travel plans and other non-essential expenses.

Contributing Factors to the Rising Average Cost of Senior Living

Rising Cost of Living

Social Security recently provided seniors with a cost of living adjustment of 2.8%, the first since 2012, and it is scheduled to be an annual increase under the current administration. While this is good news for seniors, any real benefit of such an increase in Social Security benefits is offset by rising costs of medical care, energy costs, and other related expenses. This increase is based on and hovers around the same point as the country’s inflation rate, as an attempt to offset the cost of expenses that increase every year for everybody. According to the AARP, more than 6.4 million seniors over the age of 65 live below the federal poverty level. A growing number of seniors put off retirement or work part-time to supplement their income- a 2014 survey showed that over a third of elders plan to work well past their 70s. 

Classic retirement options like pension plans, employer-contributed 401K plans, and Social Security retirement insurance may be options for some elders, but many no longer have access to the type of employment that offers these retirement benefits. Pensions are quickly becoming a relic of the past, and are commonly only available to public-sector and union employees- in 2018, only 13% of private-sector employees had a defined pension plan, dramatically lower than the 35% of private pension employees in the early 90s.  

Housing-Related Setbacks

The recent mortgage crisis has taken its toll on seniors, with some falling behind in their payments and facing foreclosure. In addition to the mortgage crisis, predatory lenders offering reverse home mortgages have created an added crisis for seniors across the country, with reports in every state of elders losing the very homes they relied on to live as well as supplement their income when they had few retirement options. 

The only federally insured reverse mortgage is available through the Department of Housing and Urban Development, but there are other lenders willing to offer this product, which is only available to those over age 62 who own their homes. Unfortunately, hundreds of thousands of elders have and are still falling short of their tax obligations, and have lost or will soon lose their homes- this crisis is especially hard in urban neighborhoods with low income and a large percentage of African American residents, with over six times more reverse mortgage foreclosures than in other neighborhoods. 

It’s easy to see why an increasing number of seniors cannot rely on their nest eggs to bail them out of dire financial straits. Some seniors are turning to family members for help, but a less-than-robust economy is putting the pinch on everybody. It’s hard for family members who are struggling themselves to chip in and help their parents or grandparents. Still, people will always want to help their aging loved ones; so, as of 2015, 34.2 million adults will care for a family member over age 50, as well as provide groceries and help pay bills. While there are many benefits of caregiving, money is not usually one of them, so these family caregivers are also dramatically affected by the costs that come along with aging. Luckily, many states offer Medicaid payments to family members who care for their aging loved ones that qualify for Medicaid benefits.

Healthcare Expenses

Medicare cutbacks are adding to the expenses some seniors now have to absorb, in addition to being the leading cause for nursing home closures as doctors are able to be reimbursed for less services. Many doctors are also reluctant to accept new patients since they do not receive the same level of reimbursement they did before. 

Financial Assistance Options for Senior Living

The average Social Security income is just over $17,500, and the low end of independent living for seniors in the US is just under that figure, meaning those able to utilize SSI will be just making ends meet with it. Nationwide budget crunches are reducing the money available for programs aimed at helping seniors. But, there are still options to help reduce the burden of paying for assisted living. 

Medicaid and Medicaid Waivers

Most assisted living facilities accept financial assistance, but some will only accept private pay residents, and long-term care insurance coverage. Many states offer Medicaid payments for eligible low-income seniors, including payment for assisted living services like medication reminders, housekeeping help, and assistance preparing food. Most states offer some type of Medicaid program to help eligible seniors pay for assisted living, except for Alabama, Louisiana, and Kentucky. On top of Medicaid, there are often other state and federal programs to help subset the cost of senior living, such as Social Security income.

Retirement Income

Retirement plans are still a great way to save for retirement- whether through an employer or self-funded. If you are one of the millions of Americans who don’t have access to an employer-funded 401K, you can contribute to your own plan, with a trusted investment firm

Insurance

Long-term care insurance is a supplementary plan meant only to cover the cost of assisted living and other long term care programs, as most health and life insurance plans will not pay for long-term care. This type of insurance is now offered through many employer-sponsored retirement plans, and you can purchase your own plan off the public market- see this handy guide for more info and links to public brokers.

Additional Options for Paying for Assisted Living

Some retirees will pay for their aging care out-of-pocket, called private payment.

If you are in a higher income bracket, it’s possible that you’re going to be funding your retirement entirely out of your own pocket. If this is the case, it can be crucial to know what to expect when preparing for retirement when you plan to live in assisted living, and signing up for a retirement community. It might even make more sense for you to move to a less expensive area to retire if you live in an area with a high cost of living. For more information on the cost of living in an assisted living facility, check out our state-by-state buying guide to assisted living

The cost of aging services varies across the country. Our researchers have spent hundreds of hours talking to the directors of retirement communities across the country to find out the real cost of living in an assisted living facility. We’ve gathered the monthly cost of room and board, as well as the base level of care services, meaning basic ADL help, meals, and housekeeping, for over 800 (and counting) facilities across the country. According to our research, the least expensive states are as follows:

  1. Florida comes in as the least expensive state, as well as one of the most beautiful. Assisted living services here average around $3,000 a month for all-inclusive care, memory care averages at $4,400 and independent living centers average $2,300.
  2. The second most affordable state we’ve found to retire in is sunny Arizona- independent living communities here average at $2,400 a month, assisted living averages at $3,600 and memory care costs an average of $4,200.
  3. Ohio is the third most affordable state to retire in, with independent living costing around $2,500 a month, assisted living averaging $4,000 and memory care at $5,000.

Among the more expensive states for senior living expenses include California and Washington.

Communities across the globe have created resources for elders, families, and their caregivers.

To achieve the best outcomes in aging, you’ll need to have a network of support in your medical team, family, and extended community. 

Given the expected rise in elderly populations across the globe, the World Health Organization (WHO) has partnered with many countries, including the US, and AARP, to create aging-friendly communities by partnering with cities and corporations to improve infrastructure for those in their later years.  The goal of this program is to educate city leaders on the best ways to improve life for elders, such as lighted sidewalks with benches, public restrooms, and easy access to public transportation.

Some communities have dedicated resources to helping build Accessory Dwelling Units, or ADUs, from existing houses. These small dwellings are perfect for a single person or a couple of elderly people who don’t need much space but want their own affordable homes to age in. These dwellings are fully customizable and can have aging friendly home modifications like walk-in showers, handrails throughout, and short nap carpet for ease when a walker is needed. Volunteers compile state regulations online to help homeowners determine their local building codes, and you can see a helpful guide to building an ADU by the AARP.

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