How do I Save Enough for a Retirement Home?

Jessica Ellis
Jessica Ellis

Many people worry that, following retirement, their assets and savings will not be enough to provide for their needs. Unfortunately, saving for a retirement home or assisted care is not an exact science; a 30 year-old professional will not be able to guess what his or her needs will be upon retirement. There are several good strategies that can help a person save enough for a retirement home, including investing in retirement accounts, long-term care insurance, and good debt management.

Some elderly people may not be able to afford to move into a retirement home.
Some elderly people may not be able to afford to move into a retirement home.

Retirement accounts can help a person save money for when he or she stops working, which can be used for daily life expenses or costs such as a retirement home. Many full-time jobs offer an employer-sponsored retirement account, in which both the employee and employer make contributions on an annual basis. Retirement accounts usually offer very good interest rates and are often tax-deferred, which means that more of the money remains in the account to keep accruing interest. The downside to retirement accounts is that most impose heavy penalties if they are opened before a given maturation date; for people planning to use a retirement account to pay for a retirement home, it is often best to leave the money alone until it can be withdrawn penalty free.

One popular option that can help save for a retirement home is long-term care insurance. This type of insurance allows the buyer to pay monthly premiums in return for coverage of retirement home or nursing home expenses once the benefit period has begun. People can choose between policies that offer limited-length care terms, such as three- or five-year plans, or unlimited plans that will provide care for the rest of the policy holder's life. This can be a very good option for people who want peace of mind about nursing or retirement home expenses; the wide variety of coverage options also opens this type of insurance up to those with fairly low income levels.

Even if a person has a good-sized nest egg for retirement, the money may be quickly sapped away by unpaid debts following retirement. In order to ensure that savings can be put toward a retirement home, it is important to try and eliminate debt well before retirement. Some investment experts suggest that, due to variable interest rates, paying off debt during youth and middle age may be more important than squirreling away savings for retirement. Once debts are under control, a retiree will not have to worry about his or her hard-earned savings vanishing into the pockets of creditors.

Jessica Ellis
Jessica Ellis

With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica is passionate about drama and film. She has many other interests, and enjoys learning and writing about a wide range of topics in her role as a wiseGEEK writer.

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