Sources for Funding Senior Care and Housing

Older adult couple using a calculator and filing papers

Some of the biggest questions that many older adults face concerns the cost of senior living and specifically, long-term care—can they afford it? How will they pay for it? Can’t they just stay at home and save money? It’s important to know your options for funding senior care before suddenly having to make a decision. The good news is there are several options available.

How likely is the need for senior care?

The statistics are hard to ignore. According to the U.S. Department of Health and Human Services, an estimated 70 percent of people over age 65 will require some form of long-term care services during their lives. Women generally need care longer than men. One-third of today’s 65-year-olds may never need long-term care, and 20 percent will need it for longer than five years.

Understanding the costs.

At first glance, the price tag for senior living might cause some sticker-shock. When you look at what you actually get for the price though, you’ll see that they include all the benefits of a full-service lifestyle, such as 24-hour on-site nurses, chef-designed meals, activities and wellness programs, access to on-site physical and occupational therapy, assistance with daily living, emergency alert system, housekeeping and other services.

But home care costs are increasing as well. According to Genworth research, factors such as low unemployment, wage pressures, regulatory changes, labor shortages, sicker patients and employee retention challenges are driving up the costs. However, it’s important to note that some services may not be covered in this figure, such as some medical needs, 24-hour monitoring and assistance, and so on. The family of a senior receiving care at home often underestimates the financial aspects as well as the toll at-home care can take on caregiver health and wellbeing.

What are some options for funding senior care?

  • Your home. Many seniors opt to use the value of their home as a source of funding senior care. Either by selling the property, or as a rental. In addition, a reverse mortgage is a type of home equity loan for homeowners 62 or older. The lending bank makes payments in a single lump sum, in monthly installments, or as a line of credit. The loan does not have to be paid back until the last borrower (often couples will both sign) passes away or moves from the home for one full year.
  • Your savings. Depending upon your situation, you might tap into your investments when exploring how you will be funding senior care. For example, maybe you’ve been setting aside money in a bank account for a long period of time for just this purpose. Or you and your financial advisor agree that liquidating stocks and bonds is your best strategy. Annuities are another option that can assist with funding senior care. Be sure to call upon professional guidance before you make a decision.
  • Your veterans benefits. Wartime veterans or a surviving spouse with limited income may be eligible to receive a non-service-connected pension to assist in paying for long-term care such as assisted living or memory care. Surviving spouses must have been married to a veteran for at least one year and must have been married to a veteran at time of death. You must present your veteran spouse’s death certificate. You may also apply for VA Aid & Attendance benefits by writing to the Pension Management Center (PMC) that serves your state. You may also visit your local regional benefit office to file your request.
  • Your life insurance. Many people don’t realize that converting a life insurance policy into a Long-Term Care Benefit Plan is an option for funding senior care. Yet, anyone with an in-force life insurance policy can transform it into a pre-funded financial account that disburses a monthly benefit to help pay for long-term care needs such as home care, assisted living, skilled nursing and hospice. Unlike life insurance, this account is a Medicaid qualified asset. Good to know: If you decide to pay for assisted living using life insurance conversion, It’s best to wait until there is an actual need for care first.
  • Your long-term care insurance. This policy covers home care and home health care services, assisted living, adult day care, respite care, hospice care, nursing home and memory care. However, it’s important to review the details of your policy. Not all long-term care insurance policies cover all services, nor do they all pay the same for similar services. Check with your broker for full details.

At New Perspective, we know the decision to move into a senior living community is complex. We are here to help you. Download our free Family Guide to Funding Senior Care & Housing. We invite you to learn more. Contact us today.