Figuring out how to pay for senior living isn’t as difficult as many older adults may think, in fact, there are ways to do it that many may not even know about. If you think senior living is out of your financial reach, think again! Here are both known and little-known ways to pay for senior living.
Personal assets – Many people have planned ahead for retirement and can pay for senior living with their personal assets. These include savings, pensions, annuities, 401k and other retirement accounts, and stocks and bonds. Some seniors also continue working full or part time providing another source to help pay for senior living costs.
Social security benefits – Social security is considered by many older adults to be one of the options available to pay for senior living and they are correct. The key to maximizing Social Security benefits is to wait as long as possible to begin receiving benefits, which allows the benefit to increase year to year until age 70 when benefits must be claimed. But Social Security has lots of tricky and often confusing aspects for many people, so get the facts in the seniorliving.org article, “A Guide to Social Security for Seniors.”
Home sale or equity – By the time many older adults reach retirement age, they are close to or have paid off their home mortgage. That means there is a large pool of money in equity in their home that can be accessed in different ways. The most well-known option is to sell the home outright, which provides a lump sum that can be invested for future use or used immediately to pay for senior living.
In addition, lesser-known possibilities include renting the home, taking out a home equity line of credit, or using money from a reverse mortgage to pay for senior living. When a move to senior living can’t wait for a home sale to close, a bridge loan can provide funds immediately for the short term. To best understand how to use a home to pay for senior living, the payingforseniorcare.com article, “Using a Home to Pay for Elder Care: Pros & Cons” takes a detailed look at how to make the right choice.
Medicare – Unfortunately, many older adults assume that Medicare will be there when they need it to pay for senior living. The truth is that Medicare is only intended to cover medical care. Under Medicare, the coverage for senior living expenses is limited to long-term care up to 100 days, such as when in a physician-prescribed rehabilitation following severe illness, injury, or surgery.
Long-term care insurance – Planning ahead to cover the costs of care often includes long-term care insurance. These policies offer different coverages and limits so it can be tricky determining what is the best combination when you are young and healthy. According to the AARP article, “Understanding Long-Term Care Insurance,” generally, long-term care insurance provides funding for senior living when the person can no longer perform activities of daily living, or has a cognitive impairment such as dementia or Alzheimer’s disease and needs daily care.
Life Insurance – Most people purchase life insurance policies to protect loved ones, but in some cases, life insurance may also provide cash that can be used to pay for senior living. First, life insurance policies can be “cashed out” and the money can be used to pay for senior living, but there are other options. For example, the payingforseniorcare.com article, “Life Care Funding – Convert Life Insurance to Eldercare Services,” takes an in-depth look at how to convert a policy by selling it to a third party for a defined amount to be used to pay for long-term care such as in memory care.
And there are even more alternatives, according to the LongTermCare.gov article, “Using Life Insurance to Pay for Long-Term Care,” including:
Veterans benefits – Veterans and their survivors may also get benefits to pay for senior living from two Veterans Administration programs: The VA Aid & Attendance Program and the Housebound Benefits program, which are provided to veterans who qualify for the VA pension. Even if a veteran hasn’t yet applied for a pension, they can do so and if approved the benefits may be retroactive.
When considering how to pay for senior living, don’t forget all the amenities and services that will make life easier, more carefree and certainly much more fun! Contact us today to get questions answered and schedule a tour of one of our beautiful Thrive Senior Living communities. For more about paying senior living expenses, download our Family Guide to Paying for Senior Living.