Retirement planning is one of those things we tend to procrastinate about until suddenly retirement is actually on the horizon. Many people put all their eggs in the Social Security basket, while others hope their additional savings will provide all the income they will need to live out their lives in comfort.
In reality, however, making sure there is enough income to survive well on takes attention and planning if it’s going to work. One good way to get a handle on retirement income is to budget for it, starting years before it’s time. Here are tips for budgeting for senior living.
Assess your assets
Having a steady income for decades lulls many people into forgetting that once they retire that income is gone. That’s why it’s essential to assess every other form of current or potential income; how much it is now and how much growth, if any, can be expected. This list should include:
For those with diverse portfolios or who want professional input, a licensed financial advisor or financial planner can help prepare a budget for senior living by creating a plan to meet long-term financial goals. If you’re not sure what kind of financial management help you need, the investopedia.com blog, “Financial Planner vs. Financial Advisor: An Overview,” offers a look at both options.
Estimate expenses
Looking ahead to those golden years it may seem like it will cost less to live, but it’s always best to estimate living expenses ahead of time. For example, work-related costs like transportation, dry cleaning and clothing will likely decrease, but other costs like travel, health care, and taxes on retirement income may well increase. That’s why estimating in advance can help establish a budget for saving to cover those additional costs. Don’t forget the day-to-day expenses as well, including groceries, utilities, gas, lawn care, entertainment, and additions like home security.
For those looking forward to a future move to a senior living community, it’s also a good time to compare the costs of living at home with those of living in a senior community where almost everything is included in the package. Download our guide, Senior Living vs. Home Care, for a breakdown of costs.
Look for ways to save
If saving money is a hit-or-miss endeavor, you are probably going to end up missing in the end. There are several opportunities to make this budget adjustment while there is still time, including:
One notable budget line item that can make retirement and senior living much more attainable is a paid-off mortgage. This can free up a considerable amount of income that can then be used for other things. To make sure a mortgage is paid off on time for senior living, daveramsey.com’s Mortgage Payoff Calculator is a great planning tool.
Prepare for increased health care needs
One of the single greatest expenses many seniors will encounter is that of health care. Life happens, and as we age, the repercussions often impact health, whether it’s memory loss, a fall or other injury, or a disease or condition that requires constant care. Even healthy seniors should be prepared for unforeseen health problems because the costs can be financially devastating.
To begin, read up on Medicare, how much it costs, and what it does and does not cover. Also do your homework about Medigap supplemental policies that cover additional costs not covered by Medicare, such as dental, eye exams, hearing aids, and most foot care.
Another very smart move is to consider long-term care insurance, especially if there is a family history of debilitating conditions like Parkinson’s or Alzheimer’s disease. Since Medicare does not cover long-term care, having that extra coverage can mean the world when the need arises. The investopedia.com blog, “Best Long-Term Care Insurance,” looks at some of the top plans available now.
For veterans, healthcare may be covered in part by benefits provided by the Veteran’s Administration. However, these benefits are dependent upon the veteran’s disability and income and may not be available to every veteran. To understand more about health care and senior living, our blog “6 Things to Know About Financing Senior Living” can help you sort out the options. If you have questions about senior living or would like to discuss your future home, contact us today! Or find a property near you!
To learn more on this topic: 7 Tips for Budgeting for Senior Living