According to investment firm The Motley Fool in an article titled This Is the Average Income for Retirees in America, “The average income for U.S. adults aged 65 and older is $75,254. However, the median income for that age group is $47,620. When we break this down, the average income for U.S. adults aged 65 and older is $6,271. The median monthly income for that age group is $3,968.”
Genworth in Cost of CareTrends & Insights reports that the 2021 national median cost of assisted living is $4,500 per month.
How then to make the math work regardless of whether you are closer to the average or the median?
Here are 5 ways:
- Allot a portion of income and savings to monthly care costs. Take stock of how much you have in your personal savings, retirement accounts and other accounts. Consider any Social Security Income (SSI), any pension payments you may receive or other income. Add up the total amount you can apply from savings and income to monthly care.
- Factor in insurance. Note what health insurance like Medicare will cover, what your private health insurance will cover and what long-term care insurance will cover. Call insurance companies directly, describe the care needed and ask what will be covered and what will not be covered given your situation. For example, you might share that assistance is needed with injections or with activities of daily living (ADLs). The more specific you can be on any healthcare needs present, the more detailed an answer you will get. Add estimated coverage amounts to your savings and income total.
- Liquidate assets to be better invested at this stage in life. You likely have equity tied up in your home that, when made available to you as liquid assets as you age, can support in financing care. Talk to a mortgage specialist about renting your home to earn passive income, selling your home to free up cash flow, tapping home equity through a reverse mortgage or taking a home equity line of credit or bridge loan. Add the estimated payout or loan amount to your savings, income and insurance total.
- Explore Veteran’s benefits, if you are eligible. If you or your loved one with whom you are exploring care served in the military, contact your local Department of Veterans Affairs to ask about aid and attendance, survivors/basic pension, disability compensation and VA insurance. Add any estimated assistance to your total from #3 above. You now have a clearer picture of what you can afford. Math still not adding up? Go to #5.
- Research public assistance. Through The California Department of Aging (CDA) you can access Medicare Counseling (HICAP) in addition to a multitude of other helpful resources and tools. HICAP “provides free, confidential one-on-one counseling, education, and assistance to individuals and their families on Medicare, Long-Term Care insurance, other health insurance related issues and planning ahead for Long-Term Care needs.” In short, the experts at HICAP can help you understand the complexities of the insurance game and how best to make it work for you in paying for senior living.