Making Senior Living Affordable: Expert Financial Tips
When it comes to retirement planning, financial questions are typically top of mind and often feel the most overwhelming. What happens if I outlive my savings? How do I use my long-term care insurance? To help answer these common concerns, we spoke with Laura Chanak, director of accounting at Westerwood. In this Q&A, she shares practical advice and insider tips to help make retirement planning more predictable and more affordable.
Q&A with Laura Chanak, Director of Accounting
Q: How does Life Care help save residents money?
A: Life Care allows residents to prepay for future medical expenses. The entrance fee you pay when moving in is considered a prepaid medical expense by the IRS, so there could be significant tax savings in your first year.
Your monthly fee also remains the same as you move through independent living, assisted living and even rehabilitation. This protects you from rising market rates, which could cost more than $10,000 a month for rehabilitation alone. Instead, you’ll pay closer to $3,000 for that same level of care under a Life Care contract.
Q: What tax advantages come with Life Care contracts?
A: One of the biggest advantages is that the entrance fee you pay is tax-deductible in the first year. After each year, we calculate a percentage of your monthly fee that qualifies as a medical expense. For example, in 2024 it was around 33.4% and we gave residents a letter in January for their tax preparer to use when filing.
Q: What if someone outlives their assets?
A: This is a big concern for many. Westerwood is a nonprofit community though, and we offer support through our Benevolent Care Fund, which was started by residents in (year?)
Westerwood’s Benevolent Care Fund helps to ensure that residents never have to worry about losing their home due to depleted assets, which is a vital safety net not available in many retirement options. For example, if someone can no longer afford their monthly fees, there’s an application process to receivefinancial support.
We look at the individual’s remaining assets, income and expenses, and cover the difference so residents can continue to remain in their home. For example, if a resident’s care costs $5,000 per month and they only bring in $3,000, we reduce their bill by $2,000 each month. All the money from the Benevolent Care Fund is gifted through generous donations.
Q: How should someone budget for senior living?
A: You can start by comparing your current monthly expenses to what’s covered in a Life Plan Community. For example, at Westerwood, you don’t pay property taxes, utilities, home maintenance or even a full grocery bill. We provide meals, activities, housekeeping and more. For residents, this can help simplify and streamline most of their monthly costs.
Q: Any advice for people with long-term care insurance?
A: Absolutely. Many people don’t actually realize or understand what their policies cover. We encourage new residents to bring their policy in before they move so we can review it together and evaluate what’s included. For example, sometimes residents’ policies will pay for in-home support services even while they’re still in independent living.
Q: What happens if someone moves in, but then something happens and they need to leave? Is any part of their entrance fee refundable?
A: If a resident moves out or passes away during that time, there is a refundable portion of the entrance fee. Typically, Life Care communities set aside part of the initial entrance fee as a refundable amount, which can be returned to the resident or their estate if they leave within a specified period. While the details may vary, families can expect a straightforward process that helps to provide some financial reassurance when unexpected situations arise.
Q: Any final tips for seniors just starting the planning process?
A: Start planning for retirement early and learn about your long-term care insurance benefits. Don’t wait until you’re in crisis mode to ask questions. There are also more resources available for financial planning than people realize, including myself and our wonderful team at Westerwood. We love answering questions and helping families.
Get More Financial Answers About Retirement
Navigating the financial aspects of senior living shouldn’t be complicated. As Laura shared, Life Plan Communities like Westerwood not only offer predictability and tax advantages, but also a built-in safety net that supports residents long into the future.
For more insights, check out our articles on life at Westerwood and affordable senior living plans. If you’re starting to plan for yourself or a loved one, the best first steps are to ask questions and then explore your options. Call us at 614–890-8282. We’d love to help!
