Just because you haven’t saved for senior living doesn’t mean you can’t afford it. Here are 6 tips to bolster your savings quickly.
6 Quick Tips on Saving for Retirement
Are you nearing retirement, but aren’t completely prepared financially? You’re not alone. According to GoBanking, 3 out of 10 baby boomers aged 55 and above have no retirement savings. What’s more, 26 percent of those who were able to put money aside say they have less than $50,000 saved. You may feel this limits your options, particularly for active senior living, but that’s not necessarily the case. Here are some ways you can bolster your savings quickly.
The Cost of Active Senior Living
You won’t know how much you need to save for retirement unless you know the cost of senior living, so let’s start there. Senior living is an umbrella term which includes several levels of care. Active senior living (or independent living) is the entry point in this continuum, which also includes assisted living, skilled nursing, and memory care.
Active senior living is designed for residents who need little daily assistance but seek less responsibility and a range of social and enrichment opportunities. Although there is little published data on senior living average cost because it varies so greatly; it typically ranges from $1,000 to $4,000 a month. Keep in mind this cost includes meals, weekly housekeeping and laundry services, as well as access to a range of activities and amenities such as fitness center and pool.
What Can Affect the Cost of Senior Living
- Level of Care – Essentially more assistance means more expense. Many seniors opt for a community that offers multiple levels of care on one campus so you’ll pay less now but have the peace of mind that a higher level of care is available if needed.
- Geography – Where you live affects the cost of senior living just like real estate. To keep costs down you might consider active senior living communities outside the city or even a different state.
- Amenities – The more luxury, the higher the cost as well. Options that impact cost include type of residence (private, semi-private, studio, one- or two-bedroom), pet fees, concierge services, and private transportation.
Know Where You Stand
You may have more resources at your disposal than you realize to pay for active senior living. Knowing where you stand starts with organizing your financial documents including:
- Bank and brokerage account information
- Deeds and mortgage documents
- Insurance policies
- Monthly or outstanding bills
- Pension and other retirement benefits
- Social Security payment information
- Stock and bond certificates
Then, consider consulting a financial advisor and/or estate planning attorney to discuss how you might be able to maximize these resources for active senior living:
- Insurance options including long-term care insurance and/or life insurance conversions
- Pension, Social Security benefits and personal property such as your home
- Potential tax deductions
- Your investment portfolio
Best Ways to Save for Retirement
If you do have a gap between your current resources and what you expect to spend on active senior living, these tips can help you save for retirement:
- Catch-Up on Contributions – Starting at age 50 you can make extra contributions to your IRA and 401(k) accounts. The extra amount is now up to $6,500 for 401(k)s and $1,000 for IRAs according to the IRS.
- Consider a Health Savings Account – To help you prepare for unexpected medical expenses and reduce your taxable income you could open a health savings account. What you save will grow tax-free, and when you turn 65 you can start making withdrawals for qualified medical expenses.
- Wait on Social Security – Although you can technically collect benefits starting at age 62, most financial advisors recommend waiting. The reason? Drawing at 70 instead of 62 can increase your monthly benefit exponentially.
- Start a Side Hustle – According to Merrill Lynch and Age Wave, 47 percent of baby boomers today enjoy working in retirement. Beyond earning extra income, it also helps you stay active and maintain a sense of purpose. You could freelance or do consulting work depending on your skillset, or even try something completely new.
- Change Spending Habits – Take a look at where/how you spend your money to see where you can cut. Perhaps switch to a pay-as-you-go cell phone, opt for streaming services versus expensive cable, or even (gasp) limit those trips to Starbucks.
- Check for Benefits – See what benefits in which you may qualify. There’s the Veterans Aid & Attendance benefit for wartime veterans or a surviving spouse. Also, the National Council on Aging’s benefitscheckup.org website makes it easy to check thousands of state and local programs.
Bonus Tip: Compare Your Costs at Home
You may think active senior living will cost you more, but when you compare it to the total cost of living at home, in some cases it can be less! How? The cost at home is more than just mortgage or rent, it also includes food, entertainment, and home upkeep, all of which are included in active senior living. Some utilities may be included too for extra value!
For additional help in saving for active senior living, check out our Financial Planning for Senior Living Guide today!