If making the move to senior living is the best option for you or your loved one, you may be looking into your financing options. There are many different ways you can fund your senior lifestyle, whether or not you intend to sell or rent out your home. We share more with you in this guide.
Understanding Senior Living Costs
At first glance, the cost of moving to a senior living community can seem high. However, once you do the math, you may find that it’s not costing you much more than it does to age in place. While senior living communities cover everything you need in one monthly payment, at home you are paying for many “hidden costs” you may not have accounted for. This includes:
- Monthly mortgage repayments
- Property taxes
- Homeowners’ insurance
- In-home care
- Cost of maintaining the plumbing and HVAC systems in your home
- Emergency repair costs when an appliance breaks down or when urgent repairs are needed
- … and more!
After adding up all the costs, you may realize that the monthly rent for a senior living community provides you with good value for money. Besides covering a fully furnished apartment, you get services such as housekeeping and maintenance thrown into the mix, three freshly prepared meals daily, and more. There are many ways you can pay for senior living – we highlight some of your financing options below.
Selling or Renting Out Your Home
You may be reluctant to part with your home which holds many years of memories, however, when it’s for the best, the proceeds can go a long way towards paying for senior living. If you are waiting for your home to sell, you can take out a bridge loan to pay for senior living in the meantime. These loans tap into your home’s equity and once your home has sold, you can easily pay it off with the proceeds.
Another option is to look into a reverse mortgage. With this type of mortgage, you will relinquish equity in your home in exchange for monthly payments which can be used to supplement your retirement income.
If you are holding onto a life insurance policy, you may be able to cash it in for more than its surrender value. This can go a long way towards paying for senior living. You may also wish to consider converting your life insurance policy into a deferred annuity. With this option, money will be withdrawn timely and paid directly to the senior living community without being taxed or suffering IRS penalties.
Although Medicaid doesn’t cover the cost of independent or assisted living in a senior living community, you may qualify for VA Aid & Attendance benefits if you are a veteran or the surviving spouse of one. You will have to meet a set of criteria to qualify and once you do, you will receive a monthly payment on top of your pension, which can go towards covering the costs of senior living.