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5 Ways to Fund Senior Living You May Not Know

When the subject of ways to fund senior living becomes a central topic in your life, you might fear that your options will be limited to only your savings. But there are other sources of funding that you may not know about—sources that can help you, or a loved one, have all the benefits of the carefree and inspiring retirement lifestyle you’ve wanted for this chapter of your life. 

Ways to Fund Senior Living:  Don’t Overlook These Options.*

1. Your Home.
Selling your home. For older adults who are looking to find a new, maintenance-free lifestyle in a modern senior living community, selling a home can be a good option. Not only can you use the proceeds from the sale, you are also freeing yourself from the logistics of trying to rent or maintain a property. You can simply put the payoff amount in the bank and use it to pay move-in fees and monthly service fees in your new community.

If you are concerned that the money might run out, you could consider buying a lifetime annuity with the proceeds. A lifetime annuity guarantees a monthly income for one or both spouses for the rest of their life regardless how long they live, and it could be an excellent option among the ways to fund senior living. 

Reverse mortgage. This option lets you borrow against the value of your home in order for you to receive a line of credit to help with the cost of senior living. It’s important to understand how a reverse mortgage works and who is a good candidate:

  • Seniors aged 62 or older who own homes outright or have small mortgages may be eligible, as long as they are current on property taxes and hazard premiums.
  • Couples or individuals in good health, and couples in which one spouse is in good health, are strong candidates to receive the benefits of a reverse mortgage. This is because it is very likely families in these situations will remain living in their homes for many years to come. Therefore, their reverse mortgages will not become due.
  • The home must meet FHA property standards and flood requirements.
  • A reverse mortgage can be paid in a single lump sum, as a line of credit, or as guaranteed monthly income for life.

A reverse mortgage becomes due when the last individual on the agreement passes away, moves away from the home for a period of more than one year, or when the home is sold. For more information on reverse mortgages, speak to your financial advisor or CPA.

2. Veterans Benefits
More than one-third of Americans over 65 are either wartime Veterans or are married to one, which means they may qualify for benefits that can help offset the cost of senior care. Yet less than 10 percent of those who qualify have even applied for Veterans Aid & Attendance. 

According to seniorlifestyle.com, to qualify for Veterans Aid & Attendance, you must receive a VA pension and meet one of the following requirements**:

  • You need another person to help you perform daily activities, like dressing, feeding, and bathing
  • You have to stay in bed or spend a large part of the day at home because of illness
  • You are a patient in a nursing home due to the loss of physical or mental abilities related to a disability
  • You have a concentric contraction of the visual field to 5 degrees or less, or your eyesight is limited to only 5/200 or less in both eyes, even with glasses or contact lenses

How much can you receive?  The 2022 Veterans Aid and Attendance Benefit rates are:

  • A Veteran with a spouse may qualify for as much as $2,431 per month
  • A single Veteran may qualify for as much as $2,050 per month
  • A well Veteran with an ill spouse may qualify for as much as $1,608 per month
  • A surviving spouse may qualify for as much as $1,318 per month

When it comes to ways to fund senior living, the Veterans Aid & Attendance is an important option to keep in mind. You never have to pay it back. Funds are tax-free. This pension is paid directly to you by the Department of Treasury.  

**Requirements are subject to change. Check with your local/county VA Administration Office. In addition to the local VA Administration Office, senior living communities may offer additional resources that understand and can assist with the application process.

3.  Long-Term Care Insurance
Long-term care insurance helps to pay for the cost of home care, adult day care, assisted living, memory care, skilled nursing and hospice by covering services typically not covered by health insurance, Medicare or Medicaid. Long-term care insurance is purchased through a private insurance company to cover the costs of elder care, including assisted living. 

Like health insurance policies, the price of the premium varies greatly depending on factors like the insured's health status, age and amount of coverage. Some policies have a specific designated benefit for nursing home care, based on a mental or physical diagnosis, which can be used in paying for assisted living. You will want to meet with your insurance advisor to determine the specific benefits of your policy. Ask if there is a maximum daily benefit or benefit period. Find out if your policy adjusts with inflation. Is there an elimination period before benefits are available? 

Long-term care insurance is one of the ways to fund senior living that calls for careful thought and assessment, but it is worthy of consideration.

4. Life Insurance Conversion
Of all the ways to fund senior living, this option is largely unknown. Anyone with an in-force whole life insurance policy can transform that policy into a pre-funded financial account that will disburse a monthly benefit to help pay for long-term care needs such at-home care, assisted living, skilled nursing and hospice. The policy usually has to be over $50,000 - $100,000. A percentage of the death benefit is paid as an immediate cash payment to help pay for senior care or housing. The entity that purchases the policy continues to pay the premiums and receives the full death benefit upon the passing of the owner.

Facts about life insurance conversion:

  • There are no application fees or obligations to apply
  • Typical enrollment time is 30-45 days 
  • The value of the conversion is based solely on the death benefit. This means the senior will receive a maximum amount of value toward their Life Care Benefit Plan. 
  • Once a policy is converted by the owner, the Long-Term Care Benefit payments begin immediately, and the enrollee is relieved of any responsibility to pay any more premiums
  • The benefit plan is an irrevocable, FDIC-insured benefit account administered by a third-party 
  • A final expense benefit is provided to help cover funeral expenses
  • Consult a financial planner to see if your life insurance policy type is eligible for conversion.

5. Your income.
As you consider ways to fund senior living, don’t forget to consider income such as social security, dividends from stocks and bonds, payments from annuities and other investments. Your financial advisor can help you determine whether or not these options will work for you. In addition, there might be a family member or acquaintance interested in contributing funds.

Consider All Your Ways to Fund Senior Living. 
Whether planning a move for yourself, or for a loved one, you want to take the time to carefully examine all the possible ways to fund senior living. Talk with your family and trusted financial advisor, and consult a senior living professional to be sure you have considered everything.  

At Clearwater Living®, we want you to feel confident in your decision by understanding your options. Visit our resource page for helpful articles as well as a cost calculator to help you evaluate the costs of your or your loved one’s current living situation versus living in a senior community. Our team of experts is happy to help answer any questions you may have or connect you with additional information. Contact us to learn more.

*Note: This article is for informational purposes only and does not constitute financial advice. You should not construe any such information as legal, tax, investment, financial, or other advice. Nothing contained on our site constitutes a solicitation, recommendation, or endorsement to buy or sell any securities or other financial instruments. All content on this site is information of a general nature and does not address the circumstances of any particular individual. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information on the site before making any decisions based on such information. In exchange for using the site, you agree not to hold Clearwater Living, its affiliates or any third-party service provider liable for any possible claim for damages arising from any decision you make based on information made available to you through the site. Consult with a financial professional like a financial advisor or certified public accountant before making any investment decisions.

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