Paying for Senior Living: The Definitive Guide
Senior living services, such as assisted living, are a necessity for many aging seniors. Without them, there would be a large gap to fill for many seniors in need. Costs for such services can run the gamut depending on where you live and the services that you or your loved one may require. While cost may seem like a barrier to entry in some cases, the good news is that most are able to afford senior living by tapping into various resources they have available.
Regardless of the level of care, residents and their families can utilize any one or more of the options above to afford senior living. Some of these are very obvious and make a whole lot of sense depending on your personal financial scenario, and others may be surprising or maybe not thought of previously.
Sale of a Home
Often, seniors have lived in their home for many, many years prior to moving into a senior living community. That typically means that they have paid off or paid down their mortgage to a significant level. When moving into a senior living community, a resident no longer has a need for their home and thus they look to the equity in their home to pay for their senior living expenses.
Rent Out an Existing Home or Reverse Mortgage
As with the previous example, when a resident moves into a senior living community, they no longer have a need for a personal home. While they could sell the home, they also have the option of renting it and taking the cash flow or securing a reverse mortgage and applying the funds to their senior living expenses. Renting does however require the help of a property management company or family to manage the business of the rental. Renting the home makes sense if the family would like to keep the home in the family for years to come. A reverse mortgage may make sense depending on local real estate market conditions.
Savings are probably the most obvious option when looking to pay for senior living. Depending on the return you’re getting from other active investments, this may be your best option. Consult with your financial advisor to see if this makes sense.
Stocks, Bonds, Annuities, Investments
Depending on the mix of investments in your portfolio, and how easy it is to liquidate them, this could be a great option. Also consider discussing with your financial advisor where they think various investment markets will be moving in the next 2 to 3 years to determine if leaving your investments in place will yield a greater percentage over that time.
Leverage a Life Insurance or Long-term Care Policy
Life insurance policies are a great option. Many don’t realize that they can sell their policies and draw funds out of them much like you can in a reverse mortgage. There are companies that specialize in buying active policies. All it takes is a simple internet search to find them. For seniors who have such policies, this option can be a popular one due to the fact that they may not require that policy any longer at this stage of life.
Social Security Payments
While this is an obvious one, it’s important to all of your options because they all add up.
Family is many times a wonderful resource to help fill gaps where personal finances may fall a bit short. When considering the cost of personally taking care of a loved one, the financial cost of contribution is small. Not to mention that family can’t provide the same benefits and services that a senior living community could, even with the occasional help on in-home care service.
Whether it’s assisted living or some other level of care, residents and their families can utilize any one or more of the options above to afford senior living. It’s important to do your due diligence as a family and understand all of your options and which ones make the most sense.
Senior living costs varying amounts in different geographic areas. Whether you live in Bergen County, New Jersey or elsewhere in the United States, it’s important to understand the costs in your specific area. It’s never too early to assess your options for affording life care at any age.
If you are addressing your finance options prior to researching specific senior living options and communities, take a look at our helpful tips for determining what the right senior living options are for you or download our Clover Hill Senior Living Step-by-Step Guide to Senior Living. Each will give you a solid foundation from which to understand the senior living landscape and provide advice on how to objectively evaluate your options for your own or your loved one’s needs, so that you can feel reassured that you are making the right decisions along your journey.
For more helpful resources on learning about senior living, please visit the Clover Hill Senior Living Resources page.