July 18, 2023

5 Things to Do Right Now to Afford Senior Living

About Brookdale Senior Living

Brookdale Senior Living offers multiple care levels for seniors in more than 600 communities nationwide. Brookdale helps you find the right care plan for yourself or your loved one. With amenities such as transportation services, salons and private dining rooms and activities such as gardening, fitness classes and trivia nights Brookdale caters to a wide range of interests and needs.

Affording senior living can be a significant concern as you approach retirement. Fortunately, there are steps you can take right now to help you plan for the costs and work to achieve financial stability.

1. Work with what you have

As you get closer to retirement, take a hard look at your income, expenses and assets. A great way to start is by reviewing your expenses to identify areas where you can cut back. Examine your discretionary expenses: Are you frequently dining out? Are there subscriptions and services you no longer need? For instance, affordable streaming options might instantly help you save on the high costs of a cable subscription or movie theater outings. You can redirect the money saved from these expenses toward your savings.

Set up automatic transfers from your checking account to a dedicated savings or investment account. By automating your savings this way, you can help to ensure that a portion of your income will go directly toward your senior living fund without requiring any active effort on your part.

If you have a large home, consider downsizing to a smaller, more affordable residence to start saving before retirement. Selling a property or other valuable assets can often provide a significant financial boost that can be used to help cover senior living costs.

2. Attack debt with a vengeance

Make a list of your debts, including credit cards, loans and any other outstanding balances. Then one way to prioritize them is based on interest rates or you can choose the “debt snowball method” — paying off the smallest debts first. You may want to allocate a portion of your income to work towards paying off these debts one by one.

Negotiate lower interest rates. Contact your creditors to see if you can negotiate lower interest rates on your debts. Explain your situation, and be proactive in seeking better terms. In most instances, securing a lower interest rate can generally help reduce the overall cost of your debt and allow you to pay it off more quickly.

Use windfalls to pay off debt. If you receive unexpected money, such as a tax refund, bonus or inheritance, consider using a portion of it to pay down your debt. Windfalls can provide an opportunity to make a significant dent in your debt and hopefully accelerate your path to savings.

Seek professional guidance. If you’re struggling with debt or finding it challenging to manage on your own, consider seeking help from a reputable credit counseling agency or a financial advisor. A credit counseling agency may be able to negotiate with creditors on your behalf or recommend certain debt management strategies tailored to your situation.

3. Maximize your retirement savings plans

Consider taking advantage of certain tax-advantaged retirement accounts, such as 401(k)s or IRAs, by contributing the maximum amount allowed under federal law (or as much as you can reasonably afford). These types of accounts usually offer certain tax benefits and may be able to help your savings grow at a higher rate of return compared to a traditional savings account.

Consider also consulting with a professional financial advisor to help determine which level of risk may be appropriate for you, such as investing in growth-oriented stocks or mutual funds. While these investments carry risks, they can also have the potential for higher returns over the long term.

If you’re over the age of 50, you may want to take advantage of catch-up contributions allowed in retirement accounts. These additional contributions can help you make up for gaps in your savings and accelerate your progress toward your senior living goals.

If your retirement is still several years away, it may be helpful to work with a financial planner to review your investments and consider whether you could afford to take a little more risk.

4. Consider a reverse mortgage

If you’re a homeowner age 62 or older with equity in your home, a reverse mortgage, also known as a home equity conversion mortgage (HECM), may be a consideration. The equity you use in the reverse mortgage could help finance your move to a retirement community later.

There are benefits to consider as well as potential drawbacks when it comes to a reverse mortgage. It’s crucial to consult with a financial advisor or an elder law attorney who can provide guidance and help you weigh the pros and cons of a reverse mortgage. One option is HUD-sponsored counseling services which are available to provide impartial advice and assist you in finding a reputable lender, for example.

Ultimately, securing a reverse mortgage is a significant decision that requires careful consideration of your personal circumstances and goals.

5. Write off medical expenses

Deducting certain medical expenses can help provide financial assistance when it comes to affording assisted living care.

According to the IRS, taxpayers may be able to deduct medical expenses that exceed 7.5% of their adjusted gross income. The care you receive in an assisted living or memory care community may qualify you for a tax deduction, provided your doctor confirms that you require assistance with at least two daily living activities. Or if you are an independent living resident and you make payments for care services directly to a third-party care provider, you may be qualified to deduct those payments.

If you’re financially responsible for more than half of a parent's medical support, you can likely deduct those expenses when they exceed 7.5% of your adjusted gross income.

Deducting medical expenses reduces your taxable income, possibly resulting in less tax money owed or a larger refund. Your deduction savings can then be used to help offset the cost of assisted living care. Just remember to keep detailed records and receipts of all assisted living care expenses to help when you file your taxes.

Taking proactive steps to afford senior living can help provide peace of mind and financial security as you approach retirement. Remember to consult with your financial advisors, credit counselors, or tax professionals who can provide personalized guidance based on your unique circumstances.

With careful planning and prudent financial decisions, you can help pave the way to afford senior living later in life.

^{The above content is shared for educational and informational purposes only. The content is not intended to be a substitute for professional legal or financial advice or counseling from an attorney or financial advisor and should not be relied upon for making legal, financial or other decisions. Never disregard professional legal or financial advice or delay in seeking it because of something you have read on our site. Please consult your attorney or financial advisor before acting on any content on this website. Reference to any products, services, third parties or links to third-party websites does not constitute an endorsement, sponsorship, or recommendation of such products, services, or third parties by Brookdale or its affiliates.}