When you’re looking into assisted living options, there are many factors to consider, such as location, atmosphere, and amenities. Along with these qualities, one of the most important aspects for many families is the cost. While senior living communities can vary widely in their pricing, you’ll likely need to prepare not only for the monthly cost, but an entrance fee and relocation expenses as well.
As an assisted living community in Los Angeles, we understand the necessity of financial planning for retirement, especially when it comes to assisted living. In this article, we’ll explore several different options that can help finance the transition into retirement housing.
Using Your Home Equity
Selling your home is one of the most well-known and effective ways to pay for assisted living. However, securing a sale may take months depending on your home’s location and condition. Additionally, the money you earn from selling your home may run out eventually, and it can also affect your Medicaid eligibility. One option is to use your earnings to buy a lifetime annuity, which will provide monthly income for the rest of your life.
As an alternative to selling, you can earn consistent income from your home by renting it out. If you do consider this option, keep in mind that caring for a rental property can be a lot of work. Finding tenants, making sure rent is collected every month, staying on top of maintenance – these are all part of being a landlord. Similarly, if you choose to rent through a service such as Airbnb, you’ll need to handle cleaning, inspecting for damage, and providing fresh linens between guests. You may want to hire someone to manage your property if you decide to rent it out.
There are also two types of loans that are often used to finance assisted living: home equity loans and reverse mortgages. Home equity loans provide funds up front and require monthly payments, while reverse mortgages don’t require you to pay back the loan. However, to qualify for a reverse mortgage, either you or your spouse must live in the home. If one spouse needs to move into assisted living while the other can remain in the house, a reverse mortgage may be appropriate.
Using Insurance for Assisted Living
Depending on your state and eligibility, Medicaid may cover a portion of your assisted living expenses. A long-term care insurance plan is also designed to cover such costs; some opt to use their home equity to pay for a long-term care plan.
You may also be able to use regular life insurance to help pay for assisted living. For example, some life insurance policies can be converted into long-term care insurance, and some life insurance plans offer a “living benefit” which provides a cash advance against the value of the policy. An alternative is to cash out your life insurance policy for a certain percentage of its value, or sell it to a third-party company who will take over the premium payments.
Other Options to Pay for Assisted Living
If you haven’t filed for Social Security yet, you may be able to increase your monthly benefit by waiting. Depending on your age, your monthly check could increase by 25% (or more) if you wait until age 70 to file for benefits.
Lastly, if you or your spouse is a veteran, you could be eligible for a pension through the Department of Veterans Affairs. The amounts vary and not everyone is eligible, but these benefits often range from $1000-$2000 monthly.
As you can see, there are many different options available to help you finance your move into assisted living. It’s never too early to start planning for any stage of retirement, and preparation helps you save money by preventing needless moves and rushed decisions.
Garden of Palms
Assisted Living in Los Angeles
We’re proud of our beautiful and welcoming assisted living community, which provides both assisted and independent living options. To learn more about us, or to schedule a tour, click here.