What do you think of when you hear the phrase independent senior living? Is it just an older person living on their own, perhaps having to take care of themselves and pay their bills? While that can certainly be part of it, there’s much more to it than that. Here are the top tips to help you prepare financially for independent senior living so that you can enjoy life on your terms without sacrificing your golden years or your savings.
Buy Long Term Care Insurance
Here’s why: Long-term care is expensive, and Medicare only covers so much of it. Without insurance, nursing home care costs are thousands of dollars a month. Long-term care insurance—a pre-paid retirement plan for your golden years—can help offset those costs and give you peace of mind about taking care of yourself in old age. If you haven’t thought about getting long-term care insurance before now, it’s not too late to start thinking about it and planning to make sure you have enough money set aside so that your old age isn’t cut short by financial hardship or health problems.
Distributions from Retirement Accounts
Did you know that you can take distributions from your IRA? Did you know that they’re taxed as ordinary income once you do? To help make sure that you are financially prepared for independent senior living, we want to provide some helpful information and tips regarding distributions from retirement accounts. First of all, there are five types of distributions: (1) periodic payments; (2) withdrawals; (3) loans; (4) hardship withdrawals; and (5) rollovers. Distributions can also be qualified or non-qualified depending on whether or not they meet certain Internal Revenue Service requirements. Common types of distributions include hardship withdrawals, rollovers, and Roth conversions – which can be a great way to get money into a Roth IRA if your income level allows it!
Accessing Home Equity
If preserving your home’s equity is one of your top priorities, it may not be possible to access that equity through a traditional home equity loan or line of credit. So, we have an alternative: Using reverse mortgages as your source for retirement income in lieu of selling your home. You can tap into it without paying any interest until you pass away. Best of all, using a reverse mortgage doesn’t require any upfront costs and doesn’t increase monthly payments; if anything, it will lower them since you won’t have to pay taxes on interest from these loans.
Veterans Benefits and State Programs
If you have served in the military, it’s possible that you are eligible for state and federal programs to help offset some of your senior living costs. Benefits include The Veteran Pension Fund or Aid and Attendance, which both help cover a portion of senior living costs; check with your local Department of Veterans Affairs office to learn more. Of course, there are many other sources of funding to consider when planning financially for independent senior living.
In conclusion, while preparing financially for independent senior living is not a one size fits all solution, it will help you make informed decisions about your future. This is different than retirement planning in that there are many factors to consider when determining what type of housing you need.