Time can play tricks on the human mind. When you’re in your 20s or 30s, you focus on building a career and starting a family. Retirement age might as well be a million years in the future, as far as the mind measuring the distance in months and years yet to come. Time marches on, then one day you realize the next birthday moves you closer to retirement than you imagined you’d be.
The wise realize at a young age that it’s better to set money aside, bit by bit, and make time work for them as savings accumulate interest in a 401K and investments hopefully grow in value. After decades of not touching that money, it’s hopefully there waiting to be put toward the cost of long-term care in retirement years so they do not have to keep a job in his or her 60s just to survive.
At senior living communities like Regency Senior Living, this sadly is not always how residents find their path to joining our family. Too often, the move to a retirement community happens as a reaction to some inciting incident that convinces family members that mom or dad are no longer able to live independently and need more specialized attention than they can provide as family caregivers. This is particularly true if an aging parent starts displaying signs of dementia. It’s not unusual for those family members to react with wide eyes when we meet with them about their aging loved one, terrified to realize they haven’t saved nearly enough to provide for their own inevitable retirement needs.
It’s a fear that Jeff Clay, Regency’s Chief Operating Officer, can relate to. “When you’re young, you focus on struggling to get ahead in your job, make house payments, and put your kids through college,” he said. “It can be really hard to even have money you’re able to save for 20, 30, or 40 years in the future.”
Finding ways to do so, however, can be the difference between embracing senior years with calm reassurance and staying awake at night wondering how on earth we are going to pay for long-term care.
Stretching Savings to Last 20 Years or More Past Retirement Age
The average life expectancy in America continues to steadily rise due to improvements in healthcare, advances in medical research, and the expansion of health coverage. According to a United Nations report, the percentage of the population in the United States age 65 and older will rise 20% by 2050. A man reaching age 65 today can expect to live, on average, until age 84.3. A woman turning 65 today can expect to live, on average, until age 86.6. That can mean making retirement savings last for 20 years beyond that final paycheck. The average American woman who reached age 65 in 2015 had a better than one-in-three chance of seeing her 90th birthday, up from a one-in-four chance 50 years ago.
Those belonging in Generation X can’t count on Social Security to pay for retirement. In 1960, there were approximately 9 workers paying into the system for every individual receiving SS benefits. The ratio of current workers to current SS beneficiaries is half of what it was in 1960.
We are warned over and over to plan for the future. Whatever the cause, the vast majority of people will be unprepared to shoulder the costs of long-term care when their time comes. Too many people wait until they are in the middle of a crisis situation before they start trying to figure out how the world of long-term care works; people don’t want to discuss it, and it’s a very expensive proposition.
The Good News is there are solutions to help many of those people who failed to plan. Seniors have options, even if they’ve not been the best about saving in the past.
If the senior is a homeowner, Regency’s Elderlife program can help them get the most out of their home equity and have an easier transition to assisted living. Rising home values seen in recent research can mean a higher quality of life for the senior. Regency receives money up front while the house is on the market, allowing the senior to move in right away to ensure they are safe, secure and cared for. Regency can update and repair the home for better showings without disturbances, allowing realtors to show it more often and without forcing the senior to clean up and leave the home on short notice.
While not ideal, as long as seniors are physically and mentally capable of still working, “clocking in” may be a way to supplement what they earn from Social Security and retirement savings. For some, the ability to continue going to work is a big plus rather than a burden.
In much the same way that college students lower their costs by sharing a dorm room together, seniors can save on the cost of an Assisted Living space. While privacy is the ideal, Assisted Living communities like Regency’s typically offer a variety of spaces so “roomies” do not have to spend every waking moment together. Unless they want to, of course.
Traditionally, the national, government-funded health insurance that Americans receive when we turn 65, Medicare, does NOT cover the costs of assisted living facilities or long-term care facilities. However, Medicare will cover qualified healthcare costs for short-term stays. For example, paying for rehab services prescribed by a doctor. Medicare is more often used to pay for a skilled nursing facility or home health care.
In some states, residents are allowed to use Medicaid, a state/federal assistance program, to cover assisted living communities. Each state has its own guidelines. In Tennessee, for example, residency in a Regency community might be possible based on a resident’s assets, income, and needs. Some conditions may apply such as mandatory companion living, and residents may be required to use private pay until they run out of their own money to pay for residency. The amount paid usually comes with a maximum cap. We recommend speaking with an elder law attorney who can guide you through the application process, ideally several years before you actually transition to an Assisted Living community.
Many wartime veterans 65 and older, spouses, and other dependents may be eligible for assistance from the U.S. Department of Veterans Affairs (VA). Eligibility for pensions and Aid & Attendance Benefits may be impacted by the veteran’s yearly family income and net worth meeting certain limits set by Congress. Net worth includes all personal property owned (except a house, car, and most home furnishings), minus any debt owed. Net worth includes the net worth of a spouse. Generally speaking, veterans approaching retirement years are expected to face a more difficult time than their WWII-era counterparts due to cases of PTSD and anger lingering from treatment following conflicts that were politically-divisive to the country. For more information on applying with the VA, visit https://www.va.gov/pension/how-to-apply/.
Clay, Regency’s COO, reflected on changes over the years and said that this option has become less enticing as insurers have realized how much long-term care can cost. Timing is very important when going this route because if someone starts paying into it at too young of an age, they can end up paying in more than they will get out of it. Clay said age 55 is the prime time to buy a long-term care insurance policy. Beyond then, it becomes more challenging to qualify as young and healthy enough to make premium payments for an undetermined number of years into the future.
Another option that seniors might consider is acquiring or using a property to create rental dwellings that will work for them over the next 20 years, generating rent from occupants that can be applied toward their own care. It’s important to know before buying an investment property that a large down payment is usually required for financing since mortgage insurance isn’t available for investment properties. The higher the caliber of the tenant, the better the rental rates. Seniors may have to rely on a handyman they can trust for upkeep and repairs, especially when investing in “fixer-uppers” to save on costs.
The bottom line is that you don’t want to be surprised when it comes to financing your retirement or the long-term care expenses of an aging loved one. It pays to confront difficult and expensive propositions, and we urge anyone reading this to start preparing if you have not already. Knowing the options, you can keep learning so you can understand the differences between Home Care, Assisted Living and Nursing Home care, and realize what is and is not covered between public and private pay. Speaking with one of Regency Senior Living’s community consultants can help with this process.
For advice on putting financial affairs in order before relocating to Assisted Living, Regency recommends speaking to an attorney with experience in estate planning and elder law like Martin L. Pierce, an attorney with the Pierce Law Firm, PLLC in Chattanooga, Tenn. To learn more about ElderLife and other options for paying for Assisted Living, call us at (615) 598-0245 or visit the Regency Senior Living office at 6711 Mountain View Road #205, Ooltewah, TN 37363.