How to reduce assisted living facility costs, according to experts

Whether you choose retirement or you can no longer work, it might be time to start thinking about long-term care, including assisted living facility costs. After all, this type of care can come with a high price tag, so it's important to know what you can and can't afford — and what your plans are for this type of care in the future. 

For example, assisted living facilities costs average about $54,000 annually, according to the National Council on Aging. And, keep in mind that where you live, the type of facility you live in and your level of care all determine those costs, so they can vary significantly depending on those and other factors.

While not all long-term care results in assisted living facility needs, you might find that this type of care is crucial to meet your needs in the long run. But because it comes with a hefty price tag, it's important to find ways to reduce those costs if you can.

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How to reduce assisted living facility costs, according to experts

Here's how to save on assisted living facility costs, experts say.

Figure out how much cash you have

Before you determine how much money goes into assisted living facility costs, you need to figure out your cash flow. Arvette M. Reid, the Client Services Director at Signature Estate & Investment Advisors (SEIA), says you should know what your cash flow will be to support your long-term care. This includes Social Security, pensions, IRA distributions, long-term care insurance and anything else included in your income.

"Next, determine what expenses will no longer continue after the move," Reid says. "For example, home insurance and maintenance costs will disappear if the home is being sold. [Then] get your arms around all of the assets, including investments and real estate. Once you have these important pieces of information — cash flow, estimated reduced expense, and assets — then you are ready to see what you can afford."

Dawn Kussow, the Executive Vice President and Chief Financial Officer at Brookdale Senior Living in Nashville, says to combine all your current expenses and you'll be able to figure out the cost of assisted living care. 

"Paying for senior living like assisted living is like taking your monthly bills, including mortgage, utilities, property taxes, groceries and more, and wrapping those costs into one monthly payment," Kussow says. 

All of those expenses will eventually become what you pay to an assisted living facility.

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Remember that costs go up annually

The costs associated with assisted living can vary based on where you live and the level of care you need. But the costs to run and manage assisted living facilities are also going up, experts say, so people are paying more for them.

"As the cost of assisted living increases, it contributes to the overall rising cost of long-term care," Robert Lowry, a Vice President and Administrator at Sunny Hills Assisted Living Facility in Florida, says. "With a growing demand [and] a finite number of qualified staff and facilities, there's a knock-on effect."

Lowry says those who are looking into assisted living facilities are looking for more amenities while also tending to their needs. 

"Individuals expect more than before, from tech to therapies to social activities," he says. "The costs of an ALF incorporate housing, personal care, and other services that aid individuals to safely live their best life."

Because of this, it's important to recognize that what you pay in your first year at an assisted living facility may not be the same as what you pay in year five. So, be sure to include those rising costs in your estimates and long-term savings plans.

Invest in a long-term care insurance policy

The right long-term care insurance policy could also be crucial to cutting down on the costs associated with assisted living, experts say.

The sooner you can open a long-term care insurance policy, the more you can save when you're younger when costs aren't as high, according to Esther Cromwell, founder and CEO at Avendelle Assisted Living in North Carolina.

"Investing in long-term care insurance can help cover the costs of assisted living facilities, home care, and other long-term care services," Cromwell says. "It's beneficial to purchase these policies earlier in life when premiums are typically lower."

It's also important to check your life insurance policies, as those might also help you with covering the costs of long-term care.

"Some life insurance policies can be converted into long-term care benefits or provide an accelerated death benefit that can be used to pay for long-term care," Cromwell says.

Lowry says these policies are important for planning for the future.

"Building a financial cushion is not an option for everyone," Lowry says. "Taking out long-term care insurance gives peace of mind that these costs will be covered or you'll have to pay significantly less."

Look into government programs

Having retirement payouts from your 401(k), IRA and pension are all helpful, but you may not have enough coming in from those places — or you may not have them at all. And that means you may need some help paying for assisted living facility costs. Cromwell suggests looking into Medicaid and other government programs that are designed to help those who need long-term care assistance.

"Investigate potential eligibility for Medicaid, which might cover the full cost of long-term care for those who qualify financially," Cromwell says. "[Also] veterans and their spouses may be eligible for benefits that can help cover the costs of long-term care."

Kussow says to use available programs to offset some of the expenses.

"Some residents may also qualify for programs that help cover or offset costs, like veteran benefits, Medicare or other health insurance, long-term care insurance, or tax deductions on their medical expenses associated with assisted living or long-term care," she says.

Figure out your specific needs

Not everyone has the same needs when it comes to long-term health care and assisted support. Because of this, there are lots of different options available, including assisted living facilities, nursing homes, home health aides and others. And, while aging in place might seem ideal for some, that doesn't mean it'll always work out.

"Get selective [and] choose a facility that suits the individual," Lowry says. "Researching costs associated with assisted living facilities or in-home care will help in estimating the amount needed."

The bottom line

The cost of assisted living is growing, so it's important to find ways to cut down on it if you can. And, the tips outlined above may be able to help you do that. But if you're going to make these moves, try to get started as early as possible. After all, early planning can ensure that you're prepared for whatever may come — and it can also help you cut down on the costs of things like long-term care insurance, which can be more affordable when purchased at a younger age.