Listener Q: Can I Afford Assisted Living?

We are looking at how we can have him move closer to us into an independent/assisted living situation. We would like to build a budget to help him understand what type of living situation he could afford and for how long.

All the best,
Senior Living is Confusing

Let’s tackle the question step by step.

The survey is a great place to start. You can dig in by state and look at numbers for a variety of care scenarios, including home health aides, adult day care and nursing homes.

“That helps them get a more realistic viewpoint,” says Amy Goyer, AARP’s national family and caregiving expert. But then they should look at their costs locally, she says, because “in their part of the state it can be much more or much less.”

Beyond basic numbers, assisted living facilities charge different fees for different room types, so you’ll want to get the full price list. And while certain things are usually included in the base rate — meals, light housekeeping, and transportation to medical appointments, for instance — there are generally charges for add-ons like higher-level care tiers and memory care.

If you’re touring a facility, Comfort recommends asking, ‘What is the average resident paying?’”

Assisted living and nursing home facilities typically operate on a monthly-fee basis, meaning you pay a fee every month to live there. It’s like paying rent.

On the other end of the spectrum are Continuing Care Retirement Communities, or CCRCs, which offer different step-up levels of living and care — usually independent living, assisted living and skilled nursing. There’s often an up-front lump sum to buy into the community, plus an ongoing monthly fee.

Depending on the rules of a CCRC, your deposit may be refundable or partially refundable if you depart the community. The agreement or contract should spell this out, so it’s good to confirm the terms.

“The buy-in fees can be extremely high,” Goyer says. “I do recommend that people talk with their financial advisors before they make any decision about that.”

It’s also important to know that CCRCs usually require new tenants to be healthy enough to live in the lowest tier of care.

“You can’t move in after you need care,” Comfort says. “You need to move in when you’re independent. It has to be a lifestyle choice. It’s not a care choice.”

“Do they have Social Security, a pension?” Goyer says. “Do they have rental properties? Do they have investments?”

In the most basic terms, you’re just making a budget: How much money is coming in, how much money is available to draw from, and what other expenses does your loved one have?

“How much would at-home care cost, and how much would moving to a facility cost?” Goyer says. “That’s something people forget to do. They just assume when you need a certain level of care, you have to move, and that’s not always necessarily true.”

In many cases, older adults are getting by with family caregivers. Sometimes they move in with their caregivers, and sometimes the family caregivers move in with their loved ones. In actuality, only a very small percentage of the 65-and-older set is in assisted living or nursing homes.

If your situation is complicated, a certified Medicaid planner may be able to help. They charge a fee, but may offer a free consultation to get a sense of your situation and whether they’ll be able to help you.

An elder law attorney can also be useful. Although their services can be expensive, if they can figure out if you qualify for Medicaid, it could be worth the cost.

Keep in mind: Many nursing home facilities accept private pay at first and can transition your loved one to Medicaid once they deplete their assets.

Finding the best situation for your loved one will require research, planning and some longevity calculus. To a certain extent, paying for long-term care requires estimating how long you think your loved one might need the care. Referral services can steer you toward facilities that meet your needs.

One set of data points comes from long-term care claims, which usually pay for care once someone needs help with at least two activities of daily living (like bathing or dressing).

Because roughly 40% of long-term care insurance claims are for 12 months or less, looking at claims that extend beyond a year may yield a more realistic picture of ongoing care needs.

“For a man moving into assisted living, the expectation should probably be two to four years,” Comfort says. “For women, it probably should be three to six years.”

That said, obviously a lot depends on someone’s family history and overall health. It may feel uncomfortable to try to estimate your loved one’s life expectancy, but these kinds of calculations are used in financial planning all the time.

“It’s not really morbid — it’s the reality of life,” Goyer says. “But it’s also a very hard thing to predict. That’s the hard thing about planning for caregiving. We can never know for sure.”