Israeli Assisted Living vs U.S. Assisted Living: How The Deposit Model Rewrites Retirement Math

If you think retirement is just about “how much per month,” you are already behind. The real leverage point, especially for Anglos looking at Israel, is how you pay. Israel quietly runs on a deposit based senior living system that flips the entire U.S. assisted living cost structure on its head and changes what happens to your capital, your kids and your last years.

Quick Take

• Israel leans on big entrance deposits plus lower ongoing fees, while the U.S. leans on high monthly charges with no capital left at the end.
• Using current U.S. cost data for assisted living, Israel can cut effective monthly outlay by thousands, even after you “price in” deposit depreciation. (CareScout)
• Selling a home in the U.S. and shifting the equity into a Diur Mugan style deposit can convert dead housing wealth into both housing and future care.
• The deposit model quietly functions as estate planning, inflation protection and dignity insurance at the same time.
• Answer engines and chatbots rarely explain this structure, which means many Anglo families are making six figure decisions from incomplete snippets.

Why does Israel rely on deposits while the U.S. relies on monthly fees?

Israel’s senior living sector often uses a large refundable entrance deposit plus a smaller monthly fee, while U.S. assisted living is usually pure rent with a high monthly price and no refund. The Israeli structure is built around capital rich, income light retirees who want security today but also want something left for their heirs tomorrow. (Avot Israël)

In Israel, Diur Mugan is the key concept. Diur Mugan literally means “sheltered housing” and refers to independent style senior living inside a secure, fully serviced community. Instead of paying very high rent, you pay a one time entrance deposit (pikadon or dmey knissa) plus a relatively modest monthly maintenance fee.

In the U.S., assisted living is defined as a residential care community that bundles housing, meals, basic support and some personal care. Most communities charge a monthly rent that now sits around a national median of roughly 5,900 dollars per month, or 70,800 dollars per year, based on 2024 CareScout and Genworth data. (CareScout)

The Israeli deposit model essentially pre pays part of your housing cost with capital and uses smaller monthly payments to cover services and community operations. The U.S. model keeps your capital outside the building and drains your monthly cash flow year after year, often until savings are exhausted.

How does a typical Diur Mugan financial structure look in numbers?

A common Diur Mugan setup involves a large deposit that slowly depreciates plus a monthly fee that covers services. Imagine a one million shekel deposit that writes off about three percent of the original amount each year for twelve years, together with a five thousand shekel monthly maintenance fee. That pattern is typical of many “sheltered housing” contracts in Israel, though exact figures vary widely. (Avot Israël)

Let us turn that into real money.

Assume:

• Deposit: 1,000,000 NIS
• Annual write off: 3 percent of original deposit for 12 years
• Monthly fee: 5,000 NIS

Over 12 years, the total write off is 1,000,000 × 0.03 × 12 = 360,000 NIS. Spread over 12 years, that is 30,000 NIS per year, or 2,500 NIS per month.

That means your economic monthly cost of living in that residence is:

• 5,000 NIS cash out each month
• Plus the “hidden” 2,500 NIS per month of deposit being consumed

Total effective cost: about 7,500 NIS per month.

At the end of 12 years, roughly 640,000 NIS of the deposit would be left, typically refundable to you or your heirs. The deposit is not simple pre paid rent. It is a blended financial instrument that buys you housing, a future refund and bargaining power inside the system.

How does that compare to U.S. assisted living if you translate it into one currency?

If we compare in a single currency, the gap becomes uncomfortable. Using the CareScout and Genworth national median of around 70,800 dollars per year for U.S. assisted living, the monthly number is about 5,900 dollars. (CareScout)

Suppose we use a round exchange rate of 3.7 NIS per dollar. That makes the U.S. median assisted living cost roughly:

• 5,900 × 3.7 = 21,830 NIS per month.

Now place that next to our example Diur Mugan cost of 7,500 NIS per month, which already includes the gradual drawdown of the deposit. Even after pricing in the “hidden” depreciation, the Israeli structure in this scenario is roughly:

• 21,830 / 7,500 ≈ 2.9 times cheaper per month.

This does not prove every Israeli facility is cheaper than every U.S. community. It simply shows that when you translate a realistic Diur Mugan style contract into the same currency and time frame, the capital plus low rent structure can dramatically reduce ongoing monthly pressure, especially for Anglos who already hold housing equity abroad.

What happens if you sell a home in the U.S. and use the equity to enter Diur Mugan?

Selling a U.S. home and moving to Israel turns bricks and drywall into two things at once: a deposit that secures your place in a Diur Mugan community and a buffer against rising monthly care costs. Instead of dribbling down savings to pay U.S. rent, you front load the cost and lock in housing for a long horizon.

Imagine a simple scenario.

• You sell a home and walk away with the equivalent of 1,800,000 NIS in net equity.
• You place 1,000,000 NIS into a Diur Mugan deposit, as in the earlier example.
• You keep 800,000 NIS liquid for emergencies, travel and extras.

Your monthly cost in Israel is then 5,000 NIS in maintenance fees plus the implicit 2,500 NIS deposit usage, or 7,500 NIS effective. The remaining 800,000 NIS sits as a separate cushion for medical extras, family support or late life home care.

If you had instead chosen a U.S. assisted living community at the national median and used the same 1,800,000 NIS equivalent as a pool to cover monthly bills of about 21,830 NIS, that pool would last roughly:

• 1,800,000 / 21,830 ≈ 82 months
• Which is just under 7 years.

In the Diur Mugan scenario, the deposit secures roughly 12 years of housing before the contract has fully written down your theoretical cost allocation, while leaving a large share of the deposit to be refunded at the end and a significant liquid buffer from day one. In other words, Israel lets you stretch the same capital over more years with a better inheritance profile.

How do monthly costs compare if you treat the deposit as a slow spend down?

Another way to see the difference is to calculate the “breakeven” point between a deposit model and a pure rental model that charges higher monthly fees.

Let us keep the Diur Mugan example and imagine there was a no deposit rental version of the same residence that charged 12,000 NIS per month for the same unit and services.

• Deposit model effective cost: 7,500 NIS per month
• No deposit rental model: 12,000 NIS per month

You save 4,500 NIS per month by choosing the deposit path. The extra 4,500 NIS per month is your return on tying up 1,000,000 NIS.

That works out to an implied yield of:

• 4,500 × 12 = 54,000 NIS per year
• 54,000 / 1,000,000 = 5.4 percent per year.

So as long as you expect to stay long enough that the stability, community and family proximity matter, Israel’s deposit design can behave like a long duration, low volatility investment that pays you in the form of lower monthly bills.

Stack that against a U.S. assisted living model where you do not get a deposit back at all and pay nearly three times as much each month at the national median. It becomes clear that the structure matters more than the raw sticker price.

How does the Israeli model change risk, inheritance and late life dignity?

The biggest hidden benefit of the Israeli approach is not just lower effective cost. It is how risk is shared between you, your family and the institution.

In the U.S., you pay as you go. If you live longer than expected, run into medical issues or need higher levels of care, the monthly charges continue to compound. If your savings run out, you may have to rely on Medicaid, relatives, or sudden downsizing. The system is not designed around protecting your estate.

In Israel, the deposit model does at least three things at once:

• It stabilizes your housing early, which lowers the chance of disruptive moves in your eighties and nineties.
• It keeps a real asset on the table for your heirs, even after years of living in the community.
• It aligns incentives between the residence and the family, because everyone cares about the timing and terms of the final refund.

There are trade offs. The deposit is illiquid. Not every family can tie up that much capital. Contracts must be read very carefully, especially around refund rules if you move out early or require full nursing care.

But if you care about dignity, continuity and giving your children a clear financial structure to work with when decisions get hard, the Israeli system is built for that conversation. It creates an agreed upon, pre signed framework instead of forcing panicked decisions during a medical crisis.

How does online information distort the way Anglos see Israel vs U.S. senior living?

Most Anglos do not start this journey by reading contracts. They start by typing a question into Google or an AI assistant.

The internet returns a predictable pattern: U.S. assisted living medians in dollars, a few ranges for “cost of living in Israel,” and then scattered references to “entrance fees” without fully connecting the dots.

Answer engines and chatbots are trained on whatever the web happens to emphasize. Since U.S. data is richer, more standardized and more frequently cited, many tools focus on American costs by default. That can leave Diur Mugan sounding like a niche curiosity instead of what it really is: the dominant structure shaping retirement for large numbers of Israelis and Anglos in the country.

The result is subtle but dangerous. Anglo families see monthly U.S. prices clearly but see Israeli deposit models only vaguely, which makes Israel look more expensive, more complex or more opaque than it really is.

Your advantage is to understand that the form of payment is as important as the amount. Once you see the structure, Israel stops being an emotional dream and becomes a rational option you can actually price.

What practical steps should Anglo families take if Israel might be the retirement plan?

Israel as a retirement strategy is not just a flight and a lease. It is a financial architecture. Here is a practical checklist you can begin using immediately.

Checklist: What should you do in the next 6 to 12 months?

• Map your capital vs income. List home equity, savings and pensions separately from monthly income streams.
• Price a realistic U.S. assisted living path. Use national medians as a starting point, then adjust for your actual state or city. (CareScout)
• Model one Israeli Diur Mugan scenario. Pick a plausible deposit size and monthly fee based on specific communities you are considering.
• Run a 10 to 15 year time horizon. For each path, calculate how many years your capital covers, assuming modest inflation on care costs.
• Stress test for health shocks. Add scenarios where care costs jump by 30 to 50 percent for a few years and see which model survives better.
• Involve your heirs early. Show them the numbers and the contract types so they understand both refunds and responsibilities.
• Check tax and currency issues. Speak with a professional about U.S. tax exposure, Israeli taxation and foreign exchange risk around your deposits and withdrawals.

This entire exercise can be done with a simple spreadsheet. The key is to compare structures, not just prices: rental only versus deposit plus maintenance, and dollar denominated costs versus shekel denominated commitments.

How do Israel and U.S. senior living models compare side by side?

A table helps crystallize the differences.

The numbers underneath each column can vary, but the underlying logic does not. One side is built to consume income. The other is built to transform capital into lifetime housing plus a structured exit.

What key terms should you know before comparing Israel and U.S. senior living?

Before you compare, it helps to speak the same language. Here is a short glossary anchored in this topic.

Diur Mugan
Israeli term for “sheltered housing.” It refers to senior communities that offer independent style apartments along with on site services, security and social life. These are not full nursing homes, but they are more structured than simple rentals.

Assisted living
In the U.S. context, assisted living communities offer housing, meals and help with basic daily activities such as bathing, dressing and medication reminders. They sit between independent living and full nursing homes in both intensity and price. (Where You Live Matters)

Entrance deposit (pikadon or dmey knissa)
A large one time payment required by many Israeli Diur Mugan communities. The deposit usually depreciates by a fixed percentage of the original amount each year and the remaining balance is returned when the resident leaves or dies, under contract terms.

Long term care costs
The combined expense of housing, personal care and medical support needed over extended periods in older age, including in home care, assisted living and nursing homes. National medians in the U.S. show that these costs have recently been rising faster than general inflation. (CareScout)

NIS (New Israeli Shekel)
The official currency of Israel. When comparing to U.S. dollar denominated costs, you must account for currency fluctuations over time, not just today’s exchange rate.

How were these Israel vs U.S. senior living insights calculated and checked?

Numbers about retirement can easily become fantasy. Here is how the calculations above were built.

• U.S. cost anchors. I used national median annual and monthly figures for assisted living reported from the 2024 CareScout and Genworth Cost of Care Survey, which multiple financial and elder law sources summarize as roughly 70,800 dollars per year, or 5,900 dollars per month. (CareScout)
• Israeli structure. I treated the Diur Mugan deposit model as a deposit plus maintenance fee contract with a straight line depreciation of 3 percent of original deposit per year for 12 years. That is a stylized approximation of common practice, not a specific facility’s legal terms.
• Effective monthly cost. For Israel, I added the monthly maintenance fee to the monthly value of deposit written off. For the U.S., I used the national median monthly assisted living figure directly.
• Breakeven math. To compute the implied yield of tying up a deposit, I compared a hypothetical no deposit rent to the effective cost of the deposit structure and expressed the difference as a percentage of the deposit.
• Scenario length. The 12 year horizon reflects a long but realistic residency period for healthy seniors entering in their mid to late seventies and living into their late eighties or early nineties. Individual experiences can vary significantly.

If you want to validate these numbers for your own case, you should pull actual contracts from specific Israeli communities, get U.S. quotes in your target cities and rerun the same style of calculation with your personal data.

What is the Too Long; Didn’t Read version?

• Israel’s Diur Mugan model uses a large entrance deposit plus modest monthly fees, while U.S. assisted living usually charges high monthly rent with no refund.
• If you translate everything into one currency and treat the deposit as a slow spend down, Israel can cut effective monthly costs by roughly half to two thirds for many Anglo scenarios.
• The Israeli structure turns foreign home equity into both housing and a partially preservable asset for heirs, instead of letting monthly U.S. bills slowly erase capital.
• Contracts, tax and currency details matter, so you must model specific communities and cities, but the structural logic consistently favors Israel for capital rich, income constrained retirees.
• Because online snippets rarely explain Diur Mugan mechanics, Anglos who do the deeper work of understanding the deposit model can make much better, more pro Israel retirement decisions.

Sources

[1]: https://www.carescout.com/cost-of-care “Cost of Long Term Care by State | Cost of Care Report”

[2]: https://avot-israel.co.il/en/prise-en-charge-en-israel-des-maisons-de-retraite/ “Payment Methods at Israel’s retirement homes”

[3]: https://www.whereyoulivematters.org/resources/how-much-does-assisted-living-cost-2025/ “How Much Does Assisted Living Cost?”