As retirement nears, even healthy, active seniors start thinking about their next move. In some cases, that may mean entering an independent living community, which can be a great option for seniors who want to downsize, remove the burden of looking after a property and live in a community that caters to their interests and social needs. But how much does this cost and is it a smart move?
U.S. News spoke to experts to get a comprehensive overview of the costs associated with independent living, including average prices, factors affecting cost and tips for budgeting. Read on for everything you need to know about the cost of independent living and how to determine whether this move makes sense for you.
How Much Does Independent Living Cost?
According to December 2023 data from the National Investment Center for Seniors Housing and Care (NIC), the average monthly unit cost a senior would pay at an independent living facility in December 2023 was $3,702 monthly. That works out to $44,424 annually.
Despite this price — which actually reflects a slowed rate growth, down from a peak during the annual period ending December 2021, according to NIC — moving to an independent living community may be a financially prudent move.
“Especially in older homes, or for seniors on a fixed income, the cost of aging in place may just be too much. From home modifications to hiring help, the expenses may be too overwhelming,” explains Stacey Eisenberg, a senior care expert and owner of A Place At Home – North Austin home care and placement in Round Rock, Texas.
Doing a cost-benefit analysis may show that independent living, with its amenities, services and socialization opportunities, could be more beneficial in the long run, though you should check with a financial advisor that these communities are right for your budget.
[Related:A Guide to Senior Apartments and Where to Find Them]
Independent living costs for a couple
If your partner or spouse meets the entry criteria for an independent community (meaning they’re old enough to live there) and they’re still in relatively good health, moving together to an independent living facility could save you money versus having each member of the couple living in separate locations. In fact, some independent living communities cater specifically to couples.
Some charge a smaller fee for the second person to enter the community. Other factors that can impact the cost for a couple:
— Differing needs for services or support
— Needing a larger — and more expensive — living space than a single person
Factors that determine the cost of independent living
The cost of independent living is influenced by several factors:
— Location. Some areas of the country cost more.
— Services and amenities. A luxury community that offers high-end activities or specialized benefits will likely cost significantly more than a basic community.
— Entrance fee. Some communities charge an entrance or property fee, which could increase your costs.
— Property size. How big a unit you rent can also greatly affect the cost of the space.
[READ: When Is It Time to Move to Independent Living?]
What Independent Living Costs Include and Exclude
Each independent living property has its own calculus for how it charges residents for the services and benefits they receive.
Many communities charge monthly fees, and these costs may include:
— Rent on the living space
— An entrance or community fee
— Utilities
— Housekeeping and property maintenance
— A set number of meals
— Activities
There are some additional costs you’re likely to encounter in retirement that are specifically excluded from independent living fees and may require a higher level of care, such as assisted living. These may include:
— Health care costs
— Assistance with the activities of daily living, such as bathing, toileting and medication management
— Skilled nursing care
[READ: Independent Living vs. Assisted Living: What’s the Difference?]
How to Pay for Independent Living
Independent living can be expensive. Below are several options that you might want to explore as you plan for how to pay for independent living.
Plan ahead and start saving early
One of the best ways to ensure you’ll be able to afford an independent living facility is to start early.
It’s never too soon to start setting aside some of your wages each month to save for retirement. Preparing as you go during your working years can help you be ready for care needs later in life.
Financing
Most seniors pay for their housing expenses out of their life savings or other assets. If you haven’t set aside enough money to cover your needs, you may have difficulty affording the type of community you’d prefer, particularly if the community you’re considering offers only rental properties.
However, some independent living communities are designed to be owner-occupied. In these situations, you may be able to get a mortgage for the living space. Talk with a financial advisor or qualified mortgage broker for more information about local programs for which you might qualify.
Private health or life insurance
Because health care services are not typically a large component of residing in an independent living community, any private health insurance policy you have is unlikely to cover much or any of your costs associated with living in this community.
However, if you have health care needs, such as doctor visits or hospital stays, those costs may be covered by your private health insurance. It all depends on the policy and the benefits it includes.
Some life insurance policies can be cashed in for a lump sum of money that you can then use to pay for housing in an independent living community. Again, it comes down to the terms of the policy.
Personal assets (pensions, annuities, investments, real estate)
The main way most older adults pay for independent living is through personal assets, such as the sale of the family home. Proceeds from that sale (after any remaining mortgage obligations have been fulfilled) can then be used to pay for any and all costs associated with independent living.
Other assets that you may be able to tap for funds:
— A retirement account, such as a 401K
— A pension or Social Security income
— Annuities and investments
— Other real estate holdings
Depending on the specifics of your situation, liquidating these assets could lead to significant tax liabilities, so be sure you understand what will happen if you cash out a particular account.
Does Medicare Pay for Independent Living?
Unfortunately, original Medicare (Medicare Part A and Part B) does not play for independent living, nor does it pay for “nonmedical home care, such as assistance with activities of daily living, even if to prevent adverse health outcomes or when related to medical conditions,” says Lauren Dunning, director of the Future of Aging at the Milken Institute, a nonpartisan think tank based in Santa Monica, California.
However, Medicare and some Medicare Advantage plans may cover some health care costs you incur while residing in an independent living community (though Dunning notes that Medicare Advantage plans, while offering some supplemental benefits, seldom cover the cost of housing in an independent living community).
Covered costs may include:
— Doctor visits and hospital-based medical care
— Prescription medications (depending on the Medicare plan you have)
— Short-term rehab or convalescent care after having been hospitalized
— Some home health care services that meet specific criteria
— Part-time or intermittent skilled nursing care, excluding room and board
There are qualifying rules for all of these care scenarios, so be sure to check your Medicare policy carefully to understand what’s covered and what you’ll be responsible for out of pocket.
Review your selections carefully during open enrollment each fall to ensure you’ve got the best coverage for your current health situation.
Does Medicaid Pay for Independent Living?
Medicaid may pay for some aspects of care delivered in an independent living setting, but you must first spend down your assets before Medicaid comes into play.
Medicaid can provide support for some seniors who need help paying for housing, but there are specific qualifying requirements and there’s a lengthy application process. Contact your local Area Agency on Aging or another expert for guidance on whether you might qualify for Medicaid and, if so, how to apply.
Does Long-Term Care Insurance Pay for Independent Living?
While independent living communities are designed for older adults who need very little support and are still able to manage their activities of daily living, there may be times when you need some additional care services. Long-term care can be provided within an independent living community.
Long-term care insurance policies are meant to pay for the costs of long-term care. These services typically include:
— Medical care
— Assistance with activities of daily living, such as bathing and using the toilet
— Medication management
— Household management and maintenance
If you’re looking to purchase long-term care insurance and you know you’d prefer to live in an independent living facility, be sure to discuss those plans with your insurance agent so you get the right policy.
Carefully review any policy before agreeing to the purchase. You may also want to have an attorney review the plan before you sign.
How to Find the Best Independent Living Facilities Near You
Here are some basic steps to follow to find a great independent living community:
— Determine your needs and preferences. Would you prefer to live in an apartment-style building or a stand-alone home? What kinds of activities and socializing options do you want? Consider everything from meals to medical needs when figuring out what you need and want most from an independent living community.
— Assess your finances. Determine how much you can reasonably afford per month and develop a budget that will include everything from rent and food to transportation and health care costs.
— Research facilities that match. With your preferences, needs and budget in mind, look at local facilities. If there seems to be alignment, it’s time to tour those communities to get a feel for what it might like to live there. Talk to staff and residents, attend activities and try the food. Could you see yourself living there?
— Ask about logistics. Find out what transportation options are available, whether there’s health care on campus or nearby and how the facilities handles emergencies and resident safety. Get a full understanding of how the community operates and your rights and responsibilities as a resident.
— Carefully consider the contract. Before making a final decision, carefully review all the fine print in any contract you’re offered. You may want to ask a trusted advisor to review the contract. This can help you ensure you’re getting a good deal.
Explore Top-Rated Independent Living Facilities With U.S. News
A terrific place to start your search for the right independent living community for you is U.S. News’ Best Independent Living Communities 2024 rating. This list was developed based on more than 400,000 responses from residents and their families. More than 3,500 communities are included. Dive in today to start you search.
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How Much Does Independent Living Cost? originally appeared on usnews.com
