Quick Ways To Save For Senior Living
By the time most people reach retirement age they have saved what they need for the future right? Not even close! In fact, 1 in 5 of people in their 70s has less than $50K saved according to a 2020 TD Ameritrade report. Whether that makes you feel better or worse is beside the point, the question is: does a lack of savings limit your options for senior living? Not with these quick ways to save.
Know What You Need
It’s hard to know what to save if you don’t yet know what you need, so let’s start there. In general, to maintain the same standard of living, you’ll need to replace approximately 70 to 90 percent of your pre-retirement income. Now of course that range is also dependent on where you live, not only geography but whether in senior living versus home, as well as when you choose to retire among other factors.
In a previous post, we detailed the different types of senior living and what you can expect financially. In addition, Fidelity reports that a 65-year-old couple retiring in 2019 could expect to spend $285,000 on healthcare costs during retirement.
Closing the Gap in Senior Living Savings
Based on the above, if you do have a gap between what you’ve saved and what you expect to spend on senior living, try these tips:
At age 50 you can start making extra contributions to your IRA and 401(k) accounts. Now up to an additional $6,500 for 401(k)s and $1,000 for IRAs according to the IRS.
This helps prepare for unexpected medical expenses and reduces taxable income. Health savings accounts grow tax-free, and when you turn 65 you can start making withdrawals for qualified medical expenses.
You can technically collect benefits starting at age 62, but most financial advisors recommend waiting because drawing at age 70 instead can increase your monthly benefit exponentially.
This tip helps in multiple ways by giving you an opportunity to stay active and maintain a sense of purpose. Depending on your skillset you could teach, freelance or do consulting work. Or, maybe you’d enjoy trying something new entirely!
By taking a look at where and how you spend your money you may be able to make considerable cuts. Start by taking a look at automatically renewing subscriptions, entertainment and dining expenses, as well as cell phone and cable expenses first.
Bonus Tip – Check with the Senior Living Community
Communities often have ways to help you save as well, so don’t forget to check for specials and options such as tiered or a la carte pricing which can give you more control over the level of services and amenities in which you pay.
Not-for-profit senior living communities like ours also have several advantages when it comes to savings. One is that we feature a rental model which means there is no expensive buy-in and you’re not locked into a permanent contract. Being a not-for-profit also gives us the ability to write our own story as to how we honor each resident’s financial commitment since we aren’t beholden to stakeholders or investors.
Learn more in our Dollars and Sense Financial Guide to Senior Living, or contact Richfield today to schedule a virtual tour.