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Generally, the right time for a nursing home is when the care receiver needs more care than he or she can reliably have in the current situation. This includes the needs of family members who can still be part of the care team even when the elder is in a nursing home.
Assisted living (if a lot of medical care isn't needed) and nursing homes simply allow the care receiver more help, and the family more flexibility to live their lives, while it still gives the family choices for care.
It's a hard decision for some, though for many the time is very obvious as the elder's safety could be at risk, or the caregiver's general health is giving out.
Take care,
Carol
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