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Financing Senior Living: More than One Way to Cover the Costs

A senior man and woman reviewing finances and preparing for retirement.

Let’s say you’ve found a senior living community that checks all the right boxes. It’s got everything you’re looking for and feels like a place where you or a loved one can thrive. The big question is: Can you afford it?

How to Plan for Retirement: Start with a Personal Financial Assessment

It’s important to know what you have to work with before you get your heart set on a particular community. Especially if you’re considering a move to a continuing care retirement community (CCRC), sometimes called a Life Plan Community. They’ll want to know your net worth and available monthly income to ensure you meet the community’s financial criteria.

If the thought of paying a large, upfront entrance fee doesn’t appeal to you, then you may want to consider moving to a rental retirement community. In either case, there are multiple ways to help finance the cost of senior living.

Traditional funding options fall into two categories: personal resources and public programs.

Personal Resources

Many older adults pay for senior living out of personal funds. These include savings, pensions, retirement funds, and income from stocks and bonds.

Many people also use the proceeds from the sale of a home to cover the costs of the entrance fee at a CCRC. If you’ve got your eye on a rental retirement community where there’s no large upfront entrance fee, the equity from the sale of a home could help cover the monthly fee for years to come.

Public Programs

You may be eligible for government health care benefits, but the benefits and eligibility requirements change over time, and some benefits differ from state to state. It’s best to check with the Centers for Medicare & Medicaid Services for the most recent information.

  • Medicare — This federal health insurance program doesn’t cover assisted living or long-term care. However, it will cover some skilled nursing care for a limited period of time for a “hospital-related medical condition.”
  • Medicaid — Both assisted living services and skilled nursing care may be covered by Medicaid if you qualify financially. To qualify, your available assets and income sources must be at or below the federal poverty level.
  • Veterans benefits — Veterans and surviving spouses of veterans may qualify for the Aid and Attendance Program, a valuable benefit available through the U.S. Department of Veterans Affairs. If you qualify, this program can help cover the cost of assisted living and skilled nursing care.

Other Ways to Help Finance Senior Living

  • Long-term care insurance — If you’re concerned about the cost of care over an extended period of time, long-term care insurance can help cover out-of-pocket costs for assisted living, memory care, nursing care, palliative and hospice care. The exact coverage depends on the type of policy you buy. Of course, the older you are when you buy a policy, the higher the cost.
  • Reverse mortgage — A reverse mortgage allows you to convert part of the equity in your home into cash without having to sell your home. The loan amount is tax-free and can be used for any expense, including long-term care. (If you have an existing mortgage or other debt against your home, you must use the funds to pay off those debts first.)
  • Life insurance — You may be able to raise cash by selling your life insurance policy for its current value. This option, known as a “life settlement,” is usually only available to people ages 70 and older. The proceeds are taxable and can be used for any reason, including paying for long-term care.
  • Rent your home — Another option is to rent your home to help pay for senior living. You could earn a monthly rental fee while your home appreciates in value until you’re ready to sell it. (Tip: Consider using a management company to ease the burden of dealing with renters.)

Preparing for Retirement Life at Heritage Senior Living

Moving to a senior living community can be one of the best decisions you’ll ever make. You won’t have to worry about home maintenance or security. You can connect with peers and make new friends. You can participate in a wealth of life-enriching programs. And you’ll enjoy greater peace of mind, knowing care is available if ever needed.

When you add it all up, you might even find that a Heritage Senior Living community costs less than staying in your home. To learn more about the value we provide, get in touch. We’re always happy to answer your questions and offer expert advice.

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