Assisted living can be expensive to fund if you are not financially prepared. If you see yourself living in an amenities-rich assisted living community in the future, you should take a look at your financial capacity. How are your retirement savings?
Ideally, the best time to start saving for retirement is in your 20s. The earlier you begin, the better off you could be. Of course, this is easier said than done. If you haven’t gotten a sufficient retirement fund, don’t worry. It’s not too late. Here are some helpful tips that can help you afford assisted living near Cherokee, SC.
Increase Contributions to IRA and 401(k)
Have you reached age 50? You can now be allowed to make extra contributions to your individual retirement account or IRA. You can add $1,000 on top of your regular contributions. The same is true for your 401(k) account. As of January 2023, the limit has been raised to $7500 from $6500 in 2022. Boosting your contributions is a great way to save more for your retirement fund.
Get a Health Savings Account
People get more prone to sickness as they age. You know how medical expenses can be really expensive even if you have insurance. By opening a health savings account, you can set aside money for a medical emergency on a pre-tax basis. The benefit of this type of account is that it can also reduce your taxable income. However, do take note that you can have a 20% penalty if you withdraw funds for non-qualified expenses before age 65.
Delay Social Security Until 70
Eligible individuals receive social security payments at the age of 62. But financial advisers will tell you to wait until you are 70 to increase the amount you receive. Every year you delay, the monthly benefit increases. Even a year of waiting can make a significant difference.
Create Multiple Streams of Income
You can continue working in your current job if you have one so that you can still enjoy a steady income. You can also look for a side hustle or passive income. Look for freelance opportunities or build a business. The point is to create multiple streams of income so you can achieve your working goals faster.
Cut Out Unnecessary Expenses
A calorie deficit is key to losing weight. The same principle can be applied to achieving a financially healthy life. You have to decrease your expenses or let go of the luxuries you don’t need to save more. Review your expenses carefully to understand the areas where you may be overspending.
Sell Assets
If you are planning on settling down in an assisted living community, consider selling your home and other assets. If you are not yet ready to sell, how about renting out your property instead? This can be a great help in increasing your cash flow for retirement.
Use VA Benefits
Are you a war veteran? Take advantage of the VA benefits provided by the government, including pension, aid and attendance, and Dependency and Indemnity Compensation (DIC).
