How Do I Pay for My Retirement Living?
As more Boomers enter retirement (approximately 10,000/day), they and their adult children will quickly learn what retirement options are available. They’ll learn there are some really good communities that offer care, safety, security and an easier life. The first question they’ll have, however, is how are we going to pay for it?
The U.S. Census Bureau estimates that approximately 6.5 million older people currently need assistance with activities of daily living and that number is expected to double by 2020. Faced with the reality of parents living longer and likely needing to join an assisted living facility, how can seniors and their families pay for their care?
Many people think Medicare will pay for senior living. Medicare may pay for a respite stay at a rehab facility for a limited duration (mostly 90 days or less). But there are factors that could reduce or stop Medicare from paying during that time period. For example, the resident’s physical condition hasn’t improved during their stay. Medicare is health insurance, you cannot count on it to pay for assisted living.
There are several options to consider that will help pay for senior living:
- Private pay from savings, sale of house, 401K, Investment portfolios etc.
- Medicaid / Medicaid Spend Down (Assisted Living, Memory Care or Adult Care Home only) for those with very limited assets
- Veterans Aid & Attendance
o For Veterans and their spouse
Visit a Disability, Aging and Veteran Services office in your county for more information
- Long Term Care Insurance
o Financial product that helps cover the future cost of a variety of long term care services
The younger and healthier the purchaser, the lower the premiums will be.
- Long-Term Care Benefit Plan
o Conversion of an in-force life insurance policy into an irrevocable FDIC-insured Benefit Account to fund long term care benefit plan
- Life or Viatical Settlements
o Sale of existing life insurance policy to a third party for more than its cash surrender value but less than its net death benefit
- Senior Care Bridge Loans
o Unsecured loan with up to six cosigners permitted instead of collateral. Maximum term of loan is three years. After three years the loan must be repaid including all interest and fees.
- Immediate Annuities
o A Contract with an insurance company under which consumers pay a certain amount of money to the company and the company sends the consumers a monthly check for the rest of their lives.
We recommend that you meet with a financial planner, elder law attorney and/or insurance agent to learn more about these funding options. It’s never too soon to start planning your future and knowing funding options now can prevent more stress should a health crisis arise.
Paying for assisted living can be a challenge, but with the right amount of planning and foresight, assisted living can be an affordable option for many seniors.