Saving for retirement can be tough, and a change in lifestyle can throw your budget for a loop. Many people don’t think about moving into a seniors home when they’re saving for retirement, or the extra expenses that requiring some level of care later on in your life might involve. When these questions come up, many haven’t been working or earning an income for years.
As a child to someone currently wondering how they can afford to make the move, there’s only so much you can do. While you want to find a great seniors home for your loved ones, you also have your own family expenses and retirement to save for. If you’re struggling with making it all work, here’s your guide to paying for independent senior living.
Lifestyle Changes Mean Fewer Expenses
As people begin looking at seniors homes, sometimes they’re surprised by the price, but they’re not looking at the expenses they’re leaving behind.
Consider some of the things you or your older parent won’t have to pay for anymore:
- Home maintenance costs, which typically add up to between $1,000 to $3,000 each year.
- Utility costs including water, hydro, gas, etc.
- The majority of your grocery bills, since your meals are often taken care of.
- Property taxes.
It all adds up to substantial savings that can suddenly make a seniors home seem much more affordable.
Find New Capital by Downsizing
Most seniors moving into a retirement residence are downsizing, and have a golden opportunity to recapitalize their retirement savings by selling off their home. Because a home is such a major purchase, most portfolios are overly committed to real estate. By downsizing and moving into a retirement residence where you rent rather than own, you free up substantial capital that can be invested and provide an ongoing income.
Downsizing typically works best when you go from owning to renting. Going from a bigger house to owning a smaller space comes with all the costs of moving and buying a home. That can cut into what you’d hoped to put toward funding your retirement.
One word of caution: market timing can play a major role in whether or not downsizing benefits you. You may want to adjust your plans if the market isn’t in your favor.
Lower Lifestyle Expenses
As you reach an age where you’re considering a seniors home, typically your lifestyle expenses decline naturally. You’re not traveling as often, dining out, buying new clothing, or spending as much on entertainment as you have in your younger years. You’ll find you have much more for necessities as these extra expenses go down.
Long-Term Care Insurance
If you’re worried that your savings may not be enough in the future should you need care, long-term care insurance can provide you with peace of mind. In the event that you develop an illness or chronic condition, long-term care insurance can help you pay for care and living in a retirement residence.
There’s more than one way to afford senior living. Downsizing will help you cut your expenses considerably and “replenish” your retirement savings. Get help where you can, and consider things like long-term care insurance to bridge the gap.