Getting older isn’t always easy — and it isn’t cheap either. Whether you’re trying to coordinate assisted living care for yourself or a loved one or you are simply planning for the future, you know prices are on the rise.
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There are approximately 28,900 assisted living communities in the U.S., with nearly 1 million licensed beds, according to the National Center for Assisted Living. These facilities provide services such as 24-hour supervision and assistance, housekeeping and maintenance, meals and dining services and transportation.
The average cost of an assisted living facility was $4,500 per month in 2021, according to Genworth. However, this number marked a 4.65% increase from 2020.
Assuming the same growth rate, that would mean the average monthly cost was $4,709 in 2022 and $4,928 in 2023. Of course, these costs vary greatly by state.
For example, in 2021, the average monthly cost of assisted living in Missouri was $3,000, followed by $3,350 in South Dakota and $3,391 in North Dakota, according to Genworth. On the priciest end, monthly assisted living costs averaged $6,978 in Washington, D.C.; $6,830 in Alaska and $6,826 in Rhode Island.
Preparing for Assisted Living
“Most people don’t know how much long-term care costs, whether it is staying home with a home care aide or moving to an assisted living community or nursing home,” said Arvette M. Reid, financial advisor and client services director at Lifecare Affordability Plan. “Contact your local area agency on aging, an aging lifecare manager or even plan a visit to a nearby assisted living community to get current pricing.”
She said it’s better to have this information in advance, so you can know your options when the need arises.
“The goal is to know the basics before you need to,” Reid added, “because digesting brand-new information in an emergency situation is not ideal and makes decision making far more difficult. Doing your research in advance can save money, and this is one of the keys to being fiscally responsible.”
She said it’s also important to surround yourself with a team.
“When buying a house, you typically work with a team that includes a Realtor, a loan officer and an inspector — each playing a key role in supporting you and your vision,” she said. “It is also important to have a team of professionals well-versed in the many care options to help guide you through the process of determining affordable care options.”
Ultimately, Reid said preparing for your golden years requires a multi-faceted approach.
“We tell our clients that long-term care planning is like a three-legged stool that must include healthcare, legal and financial professionals and clear communication, [which] is the key to keeping the stool from wobbling.”
Building a Backup Retirement Plan
Of course, the earlier you start planning for retirement, the better.
“Now more than ever, people should be thinking about retirement 30 or even 40 years in advance,” said Steve Sexton, retirement planning expert at Sexton Advisory Group. “In addition to inflation and the rising cost of living, consider that Social Security benefits are expected to run out by 2035.”
He said the sooner you can implement a retirement backup plan, the more financially prepared you’ll be during your golden years.
“A backup retirement plan is one that overshoots your base retirement plan,” he said. “This means if you’re planning on retiring in your mid to late 60s, you’re saving enough to be able to afford to retire in your early 60s.”
Because life doesn’t always go according to plan, Sexton said, you need to create some wiggle room.
“The longer you can put off retirement,” he said, “the more you’ll expand your ability to do more in retirement, including extra spending, travel, hobbies, etc.”
Sexton said you’ll need to take these steps to build a backup retirement plan:
Create a Financial Plan. He recommended working with a financial professional to create a plan that allows you to enjoy a basic retirement in your early 60s.
Maintain Healthy Finances. “Keep control of your spending and consistently contribute to your retirement accounts, HSA accounts, etc.”
Pay Off Debt. By the time you retire, you need to eliminate debt entirely.
Invest Wisely. “Maintain a diversified investment portfolio to help you weather the ups and downs of the market in the next 25-30 years,” he said. “Your risk tolerance will depend on your age and how close you are to retirement.”
Sexton said making strategic and long-term financial decisions will set the stage for a financially secure retirement.
Additionally, he recommended finding ways to maximize your Social Security and or pension within the context of your retirement plan. If you’re married, he also advised taking out enough life insurance to ensure the surviving spouse has enough to retire, if something were to happen to one of you.
Said Sexton: “Create your plans around your worst-case scenario.”
Clearly, assisted living is expensive. However, it can provide the personalized care needed when you no longer can or desire to live on your own. Therefore, it’s important to start planning for this cost as soon as possible, so you’re able to pay for it if needed.
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This article originally appeared on GOBankingRates.com: How Much Have Assisted Living Prices Risen Over the Past Year?