Paying for Assisted Living in Shelbyville: What Are Your Options?
According to an article published on Nature.com, 70% of U.S. adults 65 and older need lifetime assistance because they can no longer perform at least two activities of daily living (ADLs). Many need extra help with bathing and walking, while others require a hand with meal preparation or medication management.
If you or an older loved one in Shelbyville, IN, also experiences difficulty performing ADLs, you may have done your homework on senior communities. Now, you're wondering what options you have when paying for assisted living.
There are several, and with proper long-term care planning, seniors can prepare their finances to cover potential assisted living costs. Products and programs are also available to provide financial assistance for seniors needing such services.
Please read on, as the caring team at Walker Place Assisted Living, our senior living community in Shelbyville, IN, will explore the primary ones in this guide.
Social Security
Social Security, a federal program run by the Social Security Administration (SSA), is one of the most common ways Shelbyville, IN, seniors pay for the cost of assisted living. Indeed, it's the primary source of income for most older adults in the United States. According to the latest Federal Reserve Report on the Economic Well-Being of U.S. Households in 2023, 92% of seniors 65 and over received it in the prior 12 months.
Individual Retirement Account (IRA)
IRAs are retirement accounts that offer owners various tax benefits. Some are tax-advantaged savings, while others are tax-free accounts.
Traditional (Tax-Advantaged) IRAs
Traditional IRAs are tax-advantaged or "tax-deferred" accounts that involve pre-tax contributions. The money that account holders deposit goes straight into the accounts without getting diminished by taxes. They're among the most common and popular investment accounts that Shelbyville seniors can use to help pay for their assisted living costs.
Since account holders don't pay taxes on the money yet, their deposit amounts are higher. As a result, their funds earn more over the years due to compound interest.
Seniors can withdraw from IRAs penalty-free at age 59 ½ and beyond. Conversely, as the Internal Revenue Service (IRS) explains, traditional (and Roth) IRA withdrawals before this age range will incur a 10% penalty.
Roth (Tax-Free) IRAs
Roth IRAs aren't "tax-free" per se, as account holders have already paid taxes on their monetary contributions.
The advantage is that senior account holders won't pay taxes on their Roth IRAs' investment gains. Neither will they pay taxes upon withdrawal, provided they take money out only when they're 59 ½ or older.
401(k) Plans
Another option for senior care financing is a 401(k) plan, which, like an IRA, is a retirement savings account with tax benefits. 401(k)s work much like IRAs; traditional 401(k) plans provide tax-deferred benefits, while Roth 401(k) plans offer tax-free perks.
The primary difference is that 401(k) plans are employer-sponsored, so employers must offer them as part of their employee benefits package. On the other hand, anyone can open an IRA, whether they have an existing 401(k) or not.
Pension Plans
Also called "defined benefit plans," pension plans are retirement plans in which employers:
- Guarantee that they will pay their employees a specific monthly payment for life or
- Pay their employees a one-time lump-sum payment
- Use a formula that considers variables like salary and years of service when calculating pension payments
Pension plans offer benefits for senior living residents since the money they pay out can go toward assisted living costs. However, they're not as common as they used to be. According to a report published by the U.S. Bureau of Labor Statistics in April 2024, only 15% of private industry employees had access to defined benefit plans (as of March 2023).
Long-Term Care (LTC) Insurance
LTC insurance, or "senior care insurance," is a special type of private insurance that helps older adults pay for long-term services and support (LTSS). Although the exact terms and inclusions vary from insurer to insurer, LTC insurance typically covers seniors' expenses once they move to an assisted living community in Shelbyville, IN.
Purchasing LTC insurance is a savvy long-term care planning strategy, given that LTSS is a significant expense. With LTC insurance covering a considerable portion of assisted living expenditures, Shelbyville seniors can worry less about quickly depleting their retirement income or savings.
Life Insurance Policies
Some life insurance providers offer additional perks to their older adult policyholders, such as through a life settlement. With a life settlement, policyholders must sell their insurance plans to third parties for market value. They can then use the proceeds to fund the costs of retiring in a Shelbyville assisted living community.
Another option for seniors to use their life insurance policies is to set up a living benefit program. Insurers offering this perk allow elderly policyholders who meet specific and stringent criteria to receive a portion of their policy's death benefit while they're still alive. Policyholders can then use the funds to cover some of their assisted living expenses.
Indiana Residential Care Assistance Program (RCAP)
The Indiana RCAP is a state-funded program that provides financial assistance for seniors who:
- Are residents of Indiana
- Need some level of personal care and support from others
- Cannot live in their own homes due to a physical disability, mental illness, or age
- Live in specific licensed residential care communities, including assisted living communities
- Require financial aid
- Meet the program's income limits and other requirements
Seniors who qualify for the Indiana RCAP can receive assistance for their assisted living costs, such as housing and care coordination.
Simplify Paying for Assisted Living in Shelbyville, IN
As you learned in this guide, paying for assisted living in Shelbyville, IN, can involve one or more options, from Social Security to IRAs, 401(k)s, and LTC insurance. Older adults who meet RCAP requirements should also try to apply for this program.
At Walker Place Assisted Living, our warm, loving, and beautiful senior living community in Shelbyville, IN, we make assisted living even more financially feasible for our residents. Our rates don't just feature many amenities and services (e.g., comfy apartment homes, chef-prepared dining, and exclusive senior lifestyle programs). We also have special offers, such as our money-saving Veterans Program.
Reach out to us today to learn more about our community's maintenance-free lifestyle and high-quality services and to schedule a tour!