It’s a paradox. Everybody wants to live a long time, but nobody wants to be old! That is because - it’s no secret - aging comes with many unique challenges and opportunities.
Planning for your health, happiness, and livelihood as you or a loved one age will always be complex, but by starting early, you set yourself (and your loved ones) up for long-term security.
Everyone has different goals, needs, and wants. You or a loved one might be thinking about a retirement community or independent living situation. How can you make that part of your future plans?
Cost is only one factor one and, like most things in life, it is wise to plan ahead and get it on your radar early.
Funding Long-Term Care
Long-term care costs add up fast and if your financial plan isn’t equipped for it, you’ll run into a lot of issues. Let’s take a closer look at some funding options.
Build Costs Into Your Investment Strategy
The cost of retirement communities varies widely from state to state and depends greatly on what is included in your monthly package. The average cost per month ranges from $1,500 to $6,000. That means if you or a loved one spend 10 years in a retirement community, it could cost upwards of $600,000. Don’t panic just yet, there are some viable funding options.
One of the most common ways to save for long-term care is to self-fund. This means that you set aside a specific amount of funds to save and invest, usually as part of your overall retirement plan.
Dip Into Your HSA
You can also use funds from your Health Savings Account (HSA) to pay for future costs. While there are annual limits with HSA plans, money in an HSA rolls over from year to year and withdrawals are tax-free when used for qualified health care expenses, so it could be a good option. Keep in mind, you can’t fund an HSA after you turn 65.
Pro Tip: You can also use funds from your HSA for in-home care as long as you’re chronically ill and the treatment is part of your care plan recommended by a licensed healthcare provider. You can also use funds from your HSA to pay for a portion of qualified long-term care insurance premiums.
Consider Long-term Care Insurance
Long-term care insurance can be extremely helpful when paying for the high costs of care and can be customized to fit your needs.
However, ongoing premium payments often rise over time, so it can be difficult to continue to pay for it while in retirement. The cost of long-term care insurance varies on your age, gender, marital status, and benefit period.
Consider Riders on Life Insurance
You also have the option of adding a rider to your existing life insurance policy. The long-term care rider allows the policyholder to use their permanent life insurance death benefit while they are still living. But riders can be costly and are only available on permanent life insurance policies, which aren’t right for everyone. Determining the best path is often complicated.
Funding for your health in retirement should be a long-term goal. Your financial advisor will be able to guide you in the right direction when deciding on how to fund long-term care.
Find A Community That’s Right for You
Not all retirement communities are built alike — independent living, assisted living, nursing homes, etc. Do your research on which will be best for you or your loved one in the long run at various ages when they might be needed. It is not easy, but try to make a list of what you must have and what you can live without, then go from there.
It’s also important to see how your chosen retirement community fits into your current retirement plan. As you know, many high-quality communities don’t come cheap. It’s an investment, so it’s critical to make a plan for your finances. Aside from the options above, you may consider selling your home or take advantage of other investment opportunities to afford the price tag.
You want to make sure you have the full scope of costs so you can plan for it. While it may not be a happy thing to think about, you’ll have to take your life expectancy into consideration when estimating costs.
What are some benefits of adding a community to your retirement plan?
Easier Access To Quality Healthcare
As you age, you may need more health support than just an annual check-up. Communities can provide access to experienced doctors and specialists that can transform your day-to-day experience and improve your quality of life.
Along with doctor care, regular exercise in retirement is also critical to long-term health. Many communities also have health and fitness classes and gyms that encourage activity and wellness.
Added Benefits of Community Life
It’s understandable to be hesitant about moving into a community — whether it’s for you or the loved one you're caring for — but the benefits must be considered. Retirement communities can:
- Increase your social engagement and mental well-being
- Provide easier access to health and wellness activities
- Increase your day-to-day flexibility
- Ease the burden of maintenance tasks around the home
Perhaps one of the biggest benefits of a community setting is the number of social engagements. Residents can partake in a vast amount of hobbies and activities and create strong social connections to improve mental wellness.
Moving into a retirement community also minimizes any monotonous maintenance needs. You’ll no longer need to worry about roof leaks or mowing the lawn — it’s all taken care of! When you don’t have to worry about cooking your meals or maintaining your home, you have more time to spend doing the things you love.
Lean On Your Goals
The decision to move into a retirement community isn’t an easy one, but it’s the best decision for many. Let your goals and values guide you throughout the process. If you’re ready to integrate long-term care into your financial plan, let’s get started together.