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Are you considering senior living for yourself or a loved one? You’re not alone. The baby boomer generation is fueling this unprecedented growth of the U.S. senior population, and they’re looking for high-quality senior care and housing.
Depending on your needs and location, CareScout estimates that the monthly cost of senior living is $6,200 for assisted living.
One of the most common questions families ask is, "How do we pay for senior living?" Fortunately, there are several financial resources that may help offset the cost of assisted living, memory care, and other senior living options.
In this article, we’ll discuss the various funding sources that can help alleviate the financial burden of senior care and housing.
5 Ways to Pay for Senior Living
Personal Savings, Retirement Accounts, and Investments
Many seniors have saved for retirement and are financially ready to pay for senior care. Many use savings, pensions, IRAs, 401(k)s, investment accounts, and retirement income to help cover senior living costs.
Long-Term Care Insurance and Life Insurance Options
Don’t overlook the insurance options that can cover senior care costs:
- Long-term care insurance: Long-term care insurance can help pay the costs of in-home health care, skilled nursing, and assisted living communities. These policies may also cover the cost of assistance with activities of daily living (ADLs), dementia care, and speech, occupational, and physical therapy costs. Long-term care insurance typically has specific limitations and exclusions, so check your policy carefully.
- Life insurance policy conversion: Although life insurance policies are generally purchased for death benefits, they can cover senior care and senior living costs. You can surrender or cash in your life insurance policy to pay for senior care or a senior living community. Another option is to sell your policy to a third party for the market value, allocating part of the proceeds to pay for long-term care while retaining a portion for death benefits. Speak with your insurance professional or financial advisor to weigh the pros and cons of cashing in a life insurance policy.
Download our Guide to Funding Senior Care and Housing to learn more.
Selling or Renting a Home to Pay for Senior Living
Selling a large family home and downsizing to a smaller home is a financially savvy way to pay for senior care and housing. If you’re not interested in selling your home, consider renting it out conventionally or as an Airbnb vacation rental.
Reverse Mortgages
A reverse mortgage is a loan that allows senior homeowners aged 62 or older to borrow money based on the equity in their home. Payment can be made in a lump sum, monthly installments, or as a line of credit. Reverse mortgages have specific rules, can be complicated, and are often the source of scams targeting seniors. Be sure to speak with a financial advisor or work with a reputable bank before considering a reverse mortgage.
Veterans Benefits
Some veterans and surviving spouses may qualify for VA Aid and Attendance benefits, which can help offset the cost of assisted living, memory care, or other long-term care services. This benefit is an additional pension for veterans and their families who need help with activities of daily living such as bathing, dressing, grooming, or feeding.
Taking the time to understand this program can open the door to additional care options already available to those who qualify.
Wrap-up
Ensuring you have access to and can pay for senior care and high-quality housing is critical for a long and healthy life. By educating yourself on the various funding options available, you can make financially intelligent and informed decisions that suit your needs and financial situation.
Download our Guide to Funding Senior Care and Housing to learn more about the potential sources of funds to help you pay for senior living expenses. Across the Allegro Living family of communities—including Allegro, Alto, Spring Arbor, RoseWood Village, Hearthside, The Piper, White Springs, and Windsor Manor—our advisors help families better understand senior living costs and explore available financial resources.
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