The Quick Guide to Financial Planning for Senior Living

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When it comes to establishing a vibrant and fulfilling future, a little planning goes a long way.

Senior living is not an inexpensive proposition. Depending on the level of care, costs can run from $45,000 to more than $90,000 a year according to financial services provider Genworth.  While such figures may seem intimidating, there is much an older adult can do to prepare for a secure and satisfying lifestyle, and you may even find that these costs are less than full-time in-home care.

How to lay the foundation for such a future? Here are the key elements to consider as one explores financial opportunities in support of senior living options.

Download The Complete Guide to Choosing Between Senior Living Options

Aid and Attendance

Veterans and their spouses have access to a unique benefit known as Aid and Attendance, which can help to pay for care in the home, in assisted living, or in a nursing home. A veteran is eligible for up to $2,127 per month, while a surviving spouse is eligible for up to $1,153 per month. Such assistance is available to those who need help performing daily living tasks such as bathing or eating, or who are bedridden.

Long-Term Care Insurance

A valuable tool in the older person's financial toolkit, long-term care insurance can cover all or part of a long-term care need, greatly expanding the range of one's options. Some view it as an investment that pays off over time, typically purchased when one is still relatively young. It typically helps to pay for hands-on care for an extended period of time, especially for those who cannot take care of themselves because of a prolonged disability, illness, or cognitive impairment such as Alzheimer's.

Life Insurance

Some seniors opt to finance their retirement-community lifestyle by selling a life insurance policy. The process of obtaining such a life insurance settlement can be quick, usually under 30 days, and while you won't get the full value of the policy, you'll usually get a substantial sum, which typically is deposited into a trust that makes payments to the community. In addition to funding care, families also can set aside a certain amount as an inheritance.

Selling a Home

Many older adults view the home as the nest egg, and it is one of the most common ways to fund long-term care. There are various considerations that go into this: Are there other family members who might use the home? Are there outstanding mortgages? Is this an advantageous moment in the local real estate market? While selling a home may take some deep consideration, it's often an option worth pursuing for those looking for a change of lifestyle and an opportunity to engage in a new and exciting community experience.

Medicare and Medicaid

Medicare and Medicaid are key government programs that support senior care. Medicare covers a stay of up to 100 days in a nursing home, but does not pay for retirement or assisted living communities. Medicaid covers home care services for seniors who are blind or who have another disability that limits functioning. Some states also cover care in personal care homes.

In planning for the financial aspects of senior living, the key word is “planning.” Given the complexities around the subject, it's critical that families begin these conversations early and that they enlist the aid of qualified professionals to help them understand the myriad choices. Realtors, financial advisors, bankers, and lawyers all can be key allies in the planning process.

In addition, senior living communities can provide a wealth of information. In exploring financial options, it makes sense to take a close look at the different lifestyle choices available, the various types of communities, the amenities they offer, and the associated costs.

Senior living community directors often are well versed not just in the ins and outs of the senior lifestyle, but also in the financial considerations that attach to the various choices. They can help to guide families through alternative scenarios and can be a valuable source of information and resources for those seeking to take a financially responsible and realistic approach to these decisions.

Those who plan thoughtfully typically find that, while not inexpensive, a vibrant and fulfilling lifestyle is very much within reach.

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