If there’s a part of you that feels iffy about spending money or you’re unsure whether your budget can cover the cost of your needs and preferences, that’s totally normal! Senior living expenses can be tricky to navigate. There are no standard costs for all communities in the US because rates vary per city, state, care type, and individual. However, this cost guide may help you navigate and allocate a budget for your retirement years.

Factors Affecting Senior Living Costs

A myriad of factors can affect the cost of senior living, and it is helpful to take into consideration each factor that may contribute significantly to the increase or decrease of your initial budget.

1. Geographic Location 

The cost of senior living communities depends on where you live. Like any real estate property, it depends on demand and the supply chain. A location’s weather and access to local conveniences like shopping malls, recreational places, hospitals, restaurants, and more may drive many people to seek and promote homeownership and property investment in a certain area, which in turn drives prices higher. Job opportunities, developed infrastructure, background, and culture also play a crucial role in a location’s value.

According to a recent study by GOBankingRates, an annual expenditure in Hawaii may cost $103,610 due to the slice of paradise that it offers. Hawaii has been consistently ranked as the most expensive state due to high housing costs, energy, food costs, and more. On the other hand, states like West Virginia or Oklahoma offer the most affordable rates for retirement due to lower housing costs, tax benefits for retirees, and more affordable healthcare access. A 25-year retirement in West Virginia would only cost around $692,300 in total.

2. Type of Care

There should be a specific type of care for every senior, depending on their needs and preferences. Many homes currently offer a variety of flexible and customizable care options, and there is often overlap between these services. However, distinguishing between short and long-term care is a good starting point.

Short-Term Care

Short-term care often includes adult daycare, in-home respite care, skilled nursing, or palliative care. This could be provided for a few weeks or even months. Prices can vary depending on the location where it is offered, whether it is in the home, a senior community, or a facility.

An article by Buckner Westminster Place provides the average cost of short-term care per place. The national average for in-home respite care is about $26 per hour. Short-term services in community-based settings or those available on demand may have a national average of $80 per day. For facilities like senior living communities or nursing homes, the national average cost is $152 per day.

Long-Term Care

Long-term types of care may be more expensive because they allow seniors to age in place and enjoy many healthcare benefits long-term in a safe community or their own home. According to a 2023 article by Retire Guide, the state of Alaska has the most expensive prices in long-term care, averaging $108,405 annually, while Louisiana offers the most affordable care in the US, averaging $54,105 annually. Long-term care options may range from assisted living and in-home health aide services to nursing homes and specialized long-term memory care. Current data shows that nursing home care is the most expensive form of long-term care, costing an average of $108,405 annually.

Independent Living

For independent living communities, which are places designed for seniors who don’t need assistance with activities of daily living, Maine currently has the highest median costs at around $6,162 a month in the US. On the other hand, Mississippi has the nation’s lowest median cost, estimated at around $1,282 a month. Costs truly depend on the offerings of a community, and independent living homes are very particular about the lifestyle they offer, made possible by the facilities they provide, which leads to the next point.

3. Health Care Need

Aside from the type of care package or the level of care a senior needs, their healthcare requirements can significantly impact costs. This depends on their current health issues, necessary medications and maintenance, treatments, and more.

The Bureau of Labor Statistics (BLS) data states that over the past two decades, healthcare costs have risen much faster than inflation. The cost of medical care, encompassing services, insurance, medications, and medical equipment, from 2000’s has surged by 114.3%. Moreover, prices for all consumer goods and services increased by 80.8% during the same period. This is why during the admission process, each resident usually undergoes evaluation processes and examinations to determine their current health condition and the associated costs.

4. Facilities

Facilities may be the main reason why costs for different care homes and senior living communities vary. Certain factors, such as the technology they have, on-call concierge services, the amenities they offer, transportation options, the interior design and architecture of the place, the accessories and overall premium finishes of the community, the size of the community, its exclusivity, and much more, can all contribute to differences in cost. Some communities may offer fitness centers, community gardens, libraries, dog parks, sports centers, game rooms, and more, which can increase the budget significantly.

Some communities only charge amenity fees to residents who want to use them, while others offer full access. In most cases, communities that don’t charge amenity fees may charge more for rent to cover the costs spent on the facilities.

Payment Options and Financial Assistance

Retirement Savings Accounts

There are various retirement savings accounts that you can think of. You’ve probably heard about 401(k) plans which essentially allows anyone to contribute a portion of their wages to individual accounts. These are annual contributions to a specific amount and are invested for your retirement years. There’s also the Individual Retirement Accounts (IRAs) also designed to help people keep money for their retirement, which is self-managed savings in a range of investment options that accumulate overtime. This also offers tax advantages. There are other existing employer-sponsored retirement plans that might work for you like the Thrift Savings Plan (TSP), SEP IRA (Simplified Employee Pension Individual Retirement Account), and more.

Social Security Benefits

For Social Security benefits, eligibility is a criterion. There is a certain number of years that an individual must have worked and paid for their Social Security, usually 10 years. The earnings then define the benefits, based on your average indexed monthly earnings (AIME) over your 35 highest-earning years. When it comes to claiming these benefits, you may start as early as age 62. The more you delay claiming up to age 70 beyond your full retirement age, which is 66 and 67, the more the amount can increase, meaning waiting to claim benefits can lead to higher monthly payments in the future. Social Security benefits can definitely be a valuable source of retirement income.

Medicare and Medicaid

By definition, Medicare is a federally funded insurance program for those aged 65 or over, especially for those with disabilities or end-stage renal disease. Individuals are automatically enrolled in this insurance program if they are eligible to receive Social Security benefits. Essentially, it has two parts: Part A covers hospital costs, while Part B covers doctor visits. If you want to take advantage of other parts like drug coverage through Medicare Supplement Health Insurance (Medigap), you must enroll.

Medicaid, on the other hand, is both a federal and state program intended for those with limited financial capabilities or resources. It’s important to note that eligibility and requirements for this assistance may vary by state. Seniors may be eligible for free or low-cost health care through Medicaid based on their income and family size.

Veterans Benefits

Veterans (VA) Benefits Administration offers support to U.S. senior veterans. These benefits may vary from health care, insurance, disability compensation, home loans, and more. There are also programs in long-term care for veterans of all ages who need daily support and assistance. For elderly veterans, they can receive geriatric and long-term care programs at home, at VA medical centers, or in the community.

Long-Term Care (LTC) Insurance

Long-term care insurance is usually available from a private company and covers services offered in nursing homes, assisted living facilities, and at home. It’s crucial to do a thorough research and comparison of long-term care insurance policies in order to find one that best suits your needs and budget. This type of insurance varies based on which coverage options they offer, the benefits they provide, the period of time that must pass after the policyholder becomes eligible for benefits, and premium costs. In most cases, long-term care insurance covers services related to activities of daily living but does not cover services related to acute medical conditions. Their primary focus is on custodial care rather than medical care.