Can I afford a great senior living community?

January 9, 2019

The simple answer is, “It’s probably less expensive than you think.” However, as always, an informed consumer is a happy and satisfied consumer: The more care you require, such as memory care, the more expensive the arrangement. Following are some guidelines to help you make some very important decisions.

According to a 2018 Cost of Care survey conducted by Financial Services company Genworth, the median monthly charge for an assisted living facility is $4,000. For the sake of comparison, start by calculating the entire monthly cost of your home. Even if it’s paid for, the total may be surprising when you add utilities, maintenance (painting, water heater, new rugs, new roof, etc.) as well as taxes and insurance, which will inevitably rise.

How to pay? There are many options
In an idea situation, you’ve saved enough to self-pay, which is the simplest route. But life isn’t always ideal, and here at Shepherd Living we recognize that.

  • Private pay: The monthly cost of rent can quickly dry up savings. Cashing in personal investment portfolios, like 401k plans or IRAs, can work. If it comes to the point where all your resources have been exhausted, you can apply for Medicaid.
  • An annuity: If you have a sizable savings but are worried about outliving your resources, this may be an option. When you purchase an annuity, you pay a lump sum to the underwriters and then you will receive regular payments for the rest of your life. To put it bluntly, if you die early, the underwriters win. If you live longer, you win. Another advantage is that annuities aren’t considered full assets by Medicaid when you apply for government assistance: Your monthly payment is counted but the amount you originally paid isn’t. Get help from accountant or financial adviser on this.
  • Long-term care insurance can also help, though it may or may not cover all the costs. It’s most affordable when purchased during one’s middle-age or younger years.
  • The Department of Veterans Affairs’ assistance programs can help older veterans who served during wartime, and spouses.
  • Selling your home may be an answer, especially if it has become more valuable over the years. Be sure to check out the tax consequences.
  • Cashing in or selling a life insurance policy is another possibility. You sell to another person or a company, who pays the premiums from then on, but collect the benefit when you die. Some policies can only be cashed in if the policyholder is terminally ill; others are much more flexible. If cashing in won’t work, consider selling the policy to get a “life settlement” or “senior settlement.” This may be half to 75 percent of the policy’s face value. After buying the policy, and giving you the percentage, the third-party company pays the premiums until the policyholder dies, and then the company receives the benefits. You may also be able to switch the benefit of a life insurance policy into long-term care payments, though this typically pays less than half of the value of the policy.
  • Can your children afford to help? In many cases children can pool their resources to pay the cost of a senior living community.
  • A reverse mortgage allows you to borrow money based on equity in your home, which is paid back when you sell the home or move out. Though reverse mortgages stipulate you must live in the house, they can be useful. If, for example, a couple owns their home outright and the husband has advanced Alzheimer’s disease, the wife can get a reverse mortgage to pay for her husband’s care at a senior community that offers memory care, while remaining at home.
  • Renting out your home allows your family to maintain ownership while helping to pay for assisted living.
  • Medicaid covers care at senior communities in some states but it is only available to seniors who have little or no assets.

Some senior living communities, including Shepherd Living, offer a “financial concierge service” that can help guide you through the process of qualifying for benefits.  For more information, call or visit Shepherd Living at Savannah Quarters today: 844.8.POOLER (844.876.6537).