Complete Guide: How to Pay for Senior Housing

Financing a move to a senior living community is easier than you may think.

<p><span style="line-height: 31.428001403808594px;">How to Finance Senior Living</span></p> <p>Senior living is more affordable than you may think. Use these strategies to find your move.</p> <p>Older adults have more senior living options to choose from than ever before, and they are taking advantage of it. According to a 2013 study from Genworth Financial, at least 70 percent of people older than 65 will seek long-term care services at some point in their lives.</p> <p>With a growing abundance of choices, it&rsquo;s important to find the community that&rsquo;s a good fit for you. This is a matter of both taste and means. To start the decision-making process, begin by meeting with a representative from&nbsp;a senior living community that interests you (see &ldquo;How to Find Long-term Care in a Crisis&rdquo; for tips on comparing communities).</p> <p>&ldquo;Once you find a senior living community you like, we can help determine how to make your move happen,&rdquo; says Roque Santi, CEO of Elderlife Financial Services, a national senior financing resource based in Rockville, Md.</p> <p>How you finance your move depends on your unique preferences and assets. There are several financing options that can help make senior living affordable.</p> <p>START WITH YOUR BUDGET</p> <p>Begin your financial planning process by determining your expenses and budget. If your community of choice requires an entry fee, that will likely be your&nbsp;largest expense. You also should factor in ongoing monthly costs and any other anticipated expenses such as added health care costs. A representative from your preferred senior living community can help you pin down your total expenses.&nbsp;</p> <p>Once those costs are calculated, it&rsquo;s time to take stock of your assets. Determine what percentage of your finances are liquid and how much money will be coming in from Social Security, pensions and other funds. Your financial adviser can help you create a balance sheet to account for all these variables.</p> <p>Finally, consider your timeline: When would you like to move? When will you be able to finance that move?</p> <p>&ldquo;From there it&rsquo;s a matter of looking at all the options you have and determining the best solution,&rdquo; says Bridgette Duber, Elderlife&rsquo;s senior vice president of sales.</p> <p>TRADE A HOME FOR A HOME</p> <p>The most common way to finance a move is by selling a home, and that&rsquo;s where many seniors have a significant portion of their equity.</p> <p>According to the National Association of Home Builders, the percentage of<br />an individual&rsquo;s net worth attributed to their home&rsquo;s value increases over time, becoming especially important to those 75 and older. Seniors who pursue this option are essentially trading their current home for a new home. The return on the sale of one home often significantly contributes to, or completely covers, a senior living community entry fee.</p> <p>Accredited real estate agents who specialize in working with seniors can help determine how much your home is worth and how much work may need to be done to reap its maximum value on the market.&nbsp;</p> <p>Beyond what&rsquo;s earned from the sale, seniors will benefit from no longer needing to pay for the upkeep or taxes on their home. Eliminating these expenses frees up money to pay for any recurring costs in the senior living community.</p> <p>While selling a home makes sense for many, it might not work for everyone. Your home may not sell within the timeframe you&rsquo;ve chosen for your move. And there are emotional considerations as well: Letting go of a longtime home filled with memories can be a major life transition.</p> <p>Yet, Duber says seniors can proactively seek other solutions. If your home isn&rsquo;t selling as quickly as you&rsquo;d like, there are other ways to fund your move, including a variety of loans.</p> <p>TAKE A LOAN AGAINST ASSETS</p> <p>In her experience, Duber has seen an average 70 percent of seniors across the nation choose some sort of loan to finance their move. Loans can be taken out against real estate, portfolio assets, insurance policies and other financial resources. Duber says it&rsquo;s not uncommon to borrow against multiple assets.</p> <p>Loans are appealing because they can provide money quickly. Duber often sees seniors seeking loans if they have found a community and are eager to move, but their house hasn&rsquo;t sold yet.</p> <p>Bottom line: A loan allows you to move into senior living when you&rsquo;re ready, not when the real estate market is ready. Many senior living communities work with Elderlife to help incoming residents finance their home and often offer payment assistance with interest rates.</p> <p>Elderlife&rsquo;s line of credit, designated as a &ldquo;Senior Housing and Care Bridge Loan,&rdquo; allows for as many as six co-borrowers to help pay off the loan when the home sells and, until then, only the interest on the loan is due in small monthly payments. These unsecured loans are designed to bridge a funding gap and can often be approved and completed within 24 hours.&nbsp;</p> <p>&ldquo;Finding a loan option begins with finding a lender who understands what you&rsquo;re trying to achieve and is able to make that loan,&rdquo; Duber says. &ldquo;Once you have that understanding, you can form a partnership between the senior, the financial adviser and the senior living community.&rdquo;&nbsp;</p> <p>FINDING A LOAN OPTION BEGINS WITH FINDING A LENDER WHO UNDERSTANDS WHAT YOU&rsquo;RE TRYING TO ACHIEVE</p> <p>-Bridgette Duber,<br />Elderlife&rsquo;s senior vice president of sales</p> <p>COVER YOUR CARE COSTS</p> <p>Beyond an entry fee, there are several options for financing ongoing health care costs in a senior living community.</p> <p>For retired military personnel, the Veterans Aid and Attendance program can help pay for care received at home, in a nursing home or in assisted living. Veterans may be eligible to receive up to $1,732 per month, while their surviving spouses can receive $1,113 monthly. Retired military couples are eligible for up to $2,054 each month. (Learn more about Aid and Attendance at veteranaid.org.)</p> <p>&ldquo;A pension by itself may not be enough to cover the cost for someone, but it would be a great supplement,&rdquo; Duber says.</p> <p>However, not all veterans qualify for these funds and the program can have lengthy application and approval times, Duber says. To help seniors understand the various financial and medical requirements, va.gov offers a searchable database of accredited agents.</p> <p>For other seniors, a long-term care policy may be a good solution for covering ongoing care costs. A long-term care policy can provide protection without depleting assets. As with other types of insurance, you pay a premium to obligate the insurance company to cover your long-term care costs up to the dollar amount you specify.&nbsp;</p> <p>&ldquo;If I have some savings that I&rsquo;m tapping into each month beyond what my monthly income is, a long-term care policy could replenish that,&rdquo; Duber suggests.</p> <p>There are many long-term care coverage options from which to choose. As with any insurance policy, claims must be filed for reimbursement. Whatever policy you select, it&rsquo;s important to understand what it offers relative to your needs, as well as the parameters of your entitlement.</p> <p>&ldquo;[A long-term care policy] can help preserve your assets, and it can be a great source to protect your own income,&rdquo; Duber says.</p> <p>Some seniors may decide to sell off some&nbsp;of their investment assets to make up for a&nbsp;financial shortfall or to gain quick capital&mdash;but often, steep taxes and penalties are a deterrent. To think through your options, speak with a financial adviser.</p> <p>Clearly, there are a myriad of ways to reach your new threshold. Ultimately, financing a move will be about determining which options are right for you.&nbsp;</p> <p>FINDING A LOAN OPTION BEGINS WITH FINDING A LENDER WHO UNDERSTANDS WHAT YOU&rsquo;RE TRYING TO ACHIEVE AND IS ABLE TO MAKE THAT LOAN.</p> <p>&mdash;Bridgette Duber, senior vice president of sales at Elderlife Financial Services&nbsp;</p> <p>HOW I FINANCED MY MOVE</p> <p>To partially finance his 2013 move into Regents Point, a be.group senior living community in Irvine, Calif., Roy Kohara, 77, tapped into the equity of his three-bedroom ranch home in Irvine&rsquo;s Turtle Rock neighborhood. His home&rsquo;s value had doubled in value since he and his late wife Enid purchased it in 2000. He also refinanced his mortgage 2012 to take advantage of low interest rates.</p> <p>&ldquo;It was a great deal with rates at 3 percent, and we also had so much equity in our house,&rdquo; says Kohara. He is now preparing to lease his home to renters.</p> <p>Kohara also cashed in an annuity purchased 13 years ago to cover<br />his entrance fee. He considers himself a fairly conservative spender, saving for the future since he began his career as a graphic designer for Capital Records, where he eventually became art director.&nbsp;<br /><br />Taking a&nbsp;<span style="line-height: 31.428001403808594px;">different approach to her move to Regents Point in 2013, Evelyn Brownstone, 85, chose to hold on to her home until she&rsquo;d settled into her new community. To pay for her move in the interim, she got a private loan to cover her entrance fee. She has since sold her home.</span></p> <p>Brownstone says her move was a relief. Taking care of the house had become a burden, between ongoing yard work and maintenance.</p> <p>&ldquo;It&rsquo;s going to be better for me,&rdquo; Brownstone says. &ldquo;When something breaks, you can get somebody to come fix it. I think as I get more time to participate and I get the house squared away, it&rsquo;s going to be even better.&rdquo;&nbsp;</p> <p>This guide is brought to you by be.group. As one of California&rsquo;s largest nonprofit providers of senior living communities, our well-trained team is dedicated to helping residents and clients discover new ways to embrace life&rsquo;s possibilities and new options for exploring their potential. Our vision begins and ends with the people we serve. We&rsquo;re here to help older adults be who they want to be: themselves.</p> <p>Learn more about be.group communities at thebegroup.org. Contact us at (818) 247-0420.&nbsp;</p>

Determining how to pay for long-term care is an important consideration as you plan for the future. Use the strategies in this guide to learn about the financing options that can help you make senior living affordable.

You’ll learn how to:

  • Set your budget
  • Trade a home for a home
  • Take a loan against assets
  • Cover your care costs with options such as long-term care insurance

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ORIGINAL PUBLICATION DATE: August 11, 2014
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