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Author: Claiborne Senior Living

How to Pay for Senior Living

Because You’re Worth It: Your Guide to Financing Senior Living

You don’t have to be rich to find enrichment in a senior living community. You just have to be prepared.

A senior living community is an expense. But it is also an investment.

Your Best Investment is Yourself

At first glance, the cost of senior housing can feel overwhelming. Like every investment you’ve ever made, however—your first home when it was time to start a family, the new car you couldn’t wait to drive, the dream vacation you’ll always remember—the price tag on a senior living community tells only part of the story. Just as important as the cost is the benefit. Because you’re not just spending money. You’re getting something in return. And what you’re getting isn’t merely a place to live. It’s health and happiness. It’s independence and autonomy. It’s safety and security. It’s community and comfort. More than anything, though, it’s a future. And isn’t that what you’ve been saving for all along?

When you take a thorough look at the resources you have and the life you’ll be able to live, you might realize that a senior living community is more attractive, attainable and affordable than you imagined.

Making Aging Affordable

There are more ways than you think to fill the gaps.

Once you’ve established a budget (see Building Your Budget), you may discover a shortfall between what you have and what you need. Don’t fret! There are myriad ways to finance your move to a senior living community.

REAL ESTATE:  If you own your home, it’s probably your biggest asset. That means it might also be your easiest ticket to a senior living community.

Proceeds from a home sale may cover all or most of the entry fee at a senior living community that charges one.

If you have enough equity, you might consider selling your home outright, in which case you’ll basically be exchanging one home for another. In fact, proceeds from a home sale may cover all or most of the entry fee at a senior living community that charges one. And the money you’ll save on real estate taxes and future home repairs can be directed instead toward monthly service fees and various other daily living expenses.

Of course, home sales can take a while. If time is of the essence, a bridge loan might be helpful by giving you short-term capital with which to finance your move to a senior living while you wait for your home to sell; when it does, you can use the proceeds to repay the loan.

Of course, all of this assumes that you can sell your home quickly and for a fair price. If you can’t, there are other options. You might look into a reverse mortgage, for example, wherein you sell your home a little bit at a time back to the bank, which cuts you a monthly check in exchange for your returned equity. Or, if your home is in good shape and your local rental market is strong, you might consider renting your home until you’re ready to sell it. Although being a landlord can be quite onerous, a good property manager typically can do everything for you.

INSURANCE: If you have a life insurance policy that you no longer need, you may be able to sell it to a life settlement company in return for a lump sum that you can apply toward your entry fee at a senior living community or other senior housing costs. Although the company won’t purchase it for the policy’s full value, you typically can get more money than you otherwise would if you were to simply surrender the policy or allow it to lapse. Before you go this route, however, you should be certain that you want to give up your life insurance—you may not be able to qualify for a new policy if you decide later that you want one—and should be prepared to shop your policy around to different companies to ensure you’re getting a fair price.

Before you sell your life insurance, there are other options to consider. You should check with your insurer, for example, to find out whether you can borrow against your policy. If you’re ill, you might also be eligible for accelerated death benefits that cover the costs of a long- term, catastrophic or terminal illness while you’re still alive.

If you have long-term care insurance, that might also come into play. Depending on both the policy and your health status, you may be able to access benefits to help you pay for the cost of an assisted living, memory care or skilled nursing community.

VETERANS BENEFITS: If you or your spouse is a veteran who served in active duty during wartime, you may be able to receive a federal benefit known as the Veterans Aid & Attendance benefit. Provided above and beyond a veteran’s regular pension, it can be used to cover your care in an assisted living, memory care or skilled nursing community.

If you or your spouse is a veteran who served in active duty during wartime, you may be able to receive the Veterans Aid & Attendance benefit.

You may be eligible for this benefit if you receive a VA pension and meet at least one of these requirements:

  • You need another person to help you perform daily activities like bathing, feeding and dressing, or
  • You have to stay in bed or spend a large portion of the day in bed due to illness, or
  • You’re a patient in a nursing home due to the loss of mental or physical abilities related to a disability, or
  • Your eyesight is limited, even with glasses or contact lenses

If you are a veteran or the surviving spouse of a vet, it’s well worth your time to explore this option as a potential supplement to your other benefits and resources.

By now you can see that there are numerous financial paths one can follow to put life in a senior living community within reach. But you and your bank account probably still have some questions. That’s normal. Discuss any lingering concerns with your financial advisor and with the sales counselors at communities you’re considering and view more frequently asked questions in “Because You’re Worth It: Your Guide to Financing Senior Living.”

Financing Senior Living FAQs

Because You’re Worth It: Frequently Asked Questions about Financing Senior Living

You don’t have to be rich to find enrichment in a senior living community. You just have to be prepared.

In your search to find senior housing – and pay for it – knowledge is power!

Frequently Asked Questions

There are numerous financial paths one can follow to put life in a senior living community within reach. But you and your bank account probably still have some questions. That’s normal. Although you should discuss any lingering concerns with your financial advisor and with the sales counselors at communities you’re considering, here are a few of seniors’ most common queries.

Will Medicare pay for a senior living community?

Unfortunately, Medicare does not cover most costs associated with living in a senior living community. One exception is skilled nursing: Medicare will pay 100 percent of the cost of care up to 20 days at a skilled nursing facility and approximately 80 percent of the cost up to 80 more days for qualified individuals. However, that care must be for recovery following an inpatient hospital stay.

Medicare doesn’t cover room and board or custodial (personal) care costs in assisted living communities, although some Medicare Advantage plans may pay for personal care assistance in assisted living or memory care (but not room and board).

Medicare also will pay for “medically necessary” care outside of a hospital, which means some medical services that may be offered at an assisted living or memory care community—physical or occupational therapy, for example, or diagnostic testing. That won’t eliminate all your senior housing expenses, but it might make a dent in them if you need a certain level of care.

What about Medicaid?

Although Medicare won’t pay for a senior living community, Medicaid might. Like Medicare, Medicaid in some states will pay for medically necessary care outside of a hospital setting, including some medical services that might be available at an assisted living or memory care community. In the case of memory care, Medicaid might also cover the larger costs of living in a community—provided that community has a Medicaid contract. Of course, you must be eligible for Medicaid in the first place, which means you must have a very low income and few assets.

I have the money now. But what if I run out of money later?

Policies vary from community to community and from circumstance to circumstance. Some communities are structured like apartment rentals, in which case nonpayment of rent will be a breach of your lease that leads to eviction.

Some senior living communities also offer benevolence programs and subsidies for qualifying residents.

Other communities—including many life care communities—offer contracts that guarantee lifetime residence; as long as you pay your entry fee, you’ll have a home there for life. Some senior living communities also offer benevolence programs and subsidies for qualifying residents, who may be able to continue receiving care if health care costs deplete their assets. Because communities vary, it’s important to ask what a community’s policies are before you sign a contract or lease.

How will senior housing affect my taxes?

You can’t talk money without talking taxes. Fortunately, moving to a senior living community might actually help your tax bill. That’s because residents of some communities may qualify for a substantial tax deduction. Specifically, residents of life care communities or other “entry fee retirement communities,” who may be able to deduct a portion of their entry fee as well as a portion of their monthly service fees—provided those fees qualify as a prepaid health care expense. Whether they do will depend on what type of contract you sign with a community. If you sign a life care contract, for example—which provides for your changing health care needs as you age—you almost certainly qualify for a tax break. If you sign a modified life care contract that provides for some but not all medical needs, you might still qualify for some deductions. And if you sign a fee-for-service contract, your deductions will be minimal.

If you move to a community that charges an entrance fee, that fee may be refundable.

Will I still be able to leave an inheritance for my loved ones?

If you move to a community that charges an entrance fee, that fee may be refundable up to a certain amount in the event of your death. A refundable entrance fee is typically higher than a non-refundable one but may provide reassurance for residents who wish to leave something behind for their loved ones.

Cost vs Benefit

At first glance, the cost of senior housing can feel overwhelming. Like every investment you’ve ever made, however—your first home when it was time to start a family, the new car you couldn’t wait to drive, the dream vacation you’ll always remember—the price tag on a senior living community tells only part of the story. Just as important as the cost is the benefit. Because you’re not just spending money. You’re getting something in return. And what you’re getting isn’t merely a place to live. It’s health and happiness. It’s independence and autonomy. It’s safety and security. It’s community and comfort. More than anything, though, it’s a future. And isn’t that what you’ve been saving for all along?

When you take a thorough look at the resources you have and the life you’ll be able to live, you might realize that a senior living community is more attractive, attainable and affordable than you imagined.

Check out “Because You’re Worth It:  Your Guide Financing Senior Living” to read more or reach out to our community for personal assistance.

It’s Your Time: How Senior Living Can Make Your Golden Years Golden

A Claiborne Senior Living Guide
You’ve waited your whole life for this moment. Learn how the benefits of a senior living community can help you seize the day.
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Senior Living —

Emphasis on the “Living”

Everest. K2. Kilimanjaro. Denali. Olympus. These are just a few of the world’s most famous peaks. For even the most experienced climbers, the journey to the top of them is a dangerous slog that pushes the limits of the mind and body. At the end of each ascent, however, awaits the most beautiful apex. The air is thin and the body tired. But in the presence of so much majesty—and so much accomplishment—the soul is full.

You may not fancy yourself a mountaineer. But if you’ve reached retirement age, you’ve done your fair share of climbing. Just think of the good kids you raised, the hard jobs you worked or the happy home you made. The friendships you forged, and the loved ones you lost. The trips you took, and the lessons you learned. The sights you’ve seen, the places you’ve lived and all the great stories you’ve collected along the way. Every person, memory and experience represents a new foothold on your way to a summit that used to feel so distant but now feels inexplicably near.

Now that you’re scaling the face of one last rock, reaching triumphantly for the top, you’ve probably noticed two thoughts occupying your head. The first is a statement: “Congratulations; you made it.” The second, a question: “Now what?”

Every person, memory and experience represents a new foothold on your way to a summit that used to feel so distant but now feels inexplicably near.

There’s no simple answer to the latter. There are only choices. Lots of them, in fact. Most require more climbing amid an endless outcrop of crags. Only one affords you the luxury of resting every day in the foreground of a spectacular view: a senior living community.

Senior living communities aren’t what you think they are. They are not nursing homes, for example. A nursing home is an end. A senior living community, on the other hand, is a means. In the right senior living community, you can receive as much assistance as you want or as little. The assistance can be medical, domestic or even just social. What’s important is that it’s there when you need it—which ensures an ample supply of something else you expect in retirement: independence. It’s senior living with an emphasis on the “living.” Because when you outsource life’s challenges, you create more time, space and energy for life’s pleasures. And isn’t that why you put so much energy into climbing in the first place?

Whether you’re curious, skeptical or sold, keep reading to discover the many surprising benefits of a senior living community


magnolia flower

When you outsource life’s challenges, you create more time, space and energy for life’s pleasures.

What’s Important To You?

When they contemplate life in a retirement community, most people imagine a place. But senior living is so much more than housing. Really, it’s a lifestyle. Before you decide where you want to spend your senior years, you should therefore decide how you want to spend them. Step one is setting your priorities.
What You Want: Freedom, Fun, Fulfillment

Although no two seniors are exactly alike, older adults who are envisioning and planning their golden years consistently say it’s important to them that they have:

Freedom and Autonomy

Self-confidence born of self-reliance. The sovereignty to make your own choices, and to do things for yourself. The ability—and mobility—to go where you want, when you want. Privacy and the pursuit of happiness. Whatever it means to you, independence often tops the list of seniors’ priorities as they age.

Passions and Purpose

Retirement looks different for everyone. Some seniors want to continue working, or to start their own business. Some want to enrich their lives with volunteer work. Still others want to travel, or to spend their days indulging lifelong interests and brandnew hobbies—cooking, painting, dancing, knitting, yoga, gardening. What almost everyone has in common, however, is the desire to feel connected to and engaged by activities that fulfill them.

Before you decide where you want to spend your senior years, you should decide how you want to spend them. Step one is setting your priorities.

Meaningful Relationships

Having people can be just as important as having passions. Oftentimes, more so. Whether you want to be close to cherished family members and friends, surrounded by neighbors and community, or plugged into activities that spawn new relationships with likeminded souls, it’s important to think about your ability to maintain an active and enjoyable social life that fills your days with companionship and fun.

If these resonate with your own goals, it’s worth considering how different retirement scenarios might affect them. Aging in place might give you more autonomy, for example, but at the expense of your social life. Or perhaps you have rich friendships with your current neighbors, but the state of your home threatens your independence. Whatever your situation, you must set your priorities and calibrate your future plans accordingly. When you do, you might discover the opposite of what you expected— that a senior living community will enhance your life, not limit it.

A Fearless Future

Remember when you were young? You probably assumed that your hair would never gray, that your knees would never ache, that your vision would never blur and that your energy would never wane. Now you know better. It makes you wonder: What are you currently taking for granted? What needs might you have tomorrow about which you are in denial today?

Aging can be extremely rewarding and satisfying. But it also can be extremely scary. As you plan your next chapter, it’s therefore important to acknowledge your greatest fears and lay plans that will help you manage and mitigate their impact on your retirement years. Common worries include:

Financial Security

Even seniors who have been diligent about saving and prudent about spending worry that they might run out of money, or that they may not have enough of it to have the kind of retirement they want to have.

Declining Health

With age, even the healthiest bodies become more susceptible to illness and injury, including everything from accidents and falls to chronic illness. That’s normal—and so is worrying about your health and health care, the status of which can change quickly and dramatically over the course of your retirement years.

Aging can be extremely rewarding and satisfying. But it also can be extremely scary.

Failing Memory

Because the prospect of cognitive decline can be as worrisome as the prospect of physical decline, memory care—including dementia care and Alzheimer’s care—is top of mind for many seniors.

Loss of Independence

You spent your youth learning how to be independent. In that way, adulthood was a destination; once you arrived, you never imagined you’d have to go back. It’s no wonder, then, that the idea of losing one’s autonomy can be just as upsetting as the idea of losing one’s faculties.

Becoming A Burden

From your spouse and children to your aging parents and grandparents, you’ve devoted your life to caring for others. Now, you’re facing the prospect that others might have to care for you. But what if there’s no one to do it? Or worse yet, what if there is? You know from being a caretaker yourself how much time and energy it takes to care for someone who can’t care for themselves. It’s all-consuming. So while having no one to care for you is a scary proposition, the idea of asking loved ones to be responsible for you can be its own source of dread.

Social Isolation

With aging often comes loss, including the loss of spouses, family members and friends. Sometimes, loved ones are lost to death. Other times, they’re lost to circumstances—for example, you might not be as mobile as you used to be, or as energetic, which causes you to see people less often. Either way, isolation and loneliness for seniors are real possibilities and legitimate concerns. Although you should hope for the best, you should plan for the worst. A senior living community is flexible enough to accommodate both scenarios, not to mention countless possibilities in between.

What Are Your Options?

Once you understand what you want life as an older adult to look like, you can begin searching for senior housing solutions that make your goals possible—not just today, but for years and decades to come.

  • Aging In Place

    For many people who are looking at senior living communities, the first choice is actually the absence of community. It’s easy to understand why. Aging in place—growing old either in your own home or in that of a family member—is familiar and comfortable, and on first glance might appear to be more affordable and dignified than other alternatives. On closer inspection, however, aging in place isn’t always what it’s cracked up to be.

    Consider home maintenance and health care, for instance. Over time, both become more urgent, but also more difficult for seniors to manage independently. As a result, seniors who age in place often need more help from family, friends, neighbors and service providers, be it a handyman to make critical home repairs and modifications (e.g., installing wheelchair ramps and bathroom grab bars) or an in-home nurse to assist with medical needs. The costs and inconvenience add up—and so do the safety risks, which threaten to disrupt even the best-laid plans.

    Even if your home is perfect, it’s easy to become over-reliant on family and friends. If not for help with home maintenance, then with transportation, housework, errands or entertainment. When you age in place, your network tends to be small, which can place an undue burden on the people you know and love—whether you realize it or not.

  • Independent Living

    Independent living communities might include age-restricted apartments, condominiums or single-family homes. Sometimes they look like a college campus, and other times like a residential neighborhood. In some cases, they even resemble small cities. In all cases, however, they’re designed for self-sufficient seniors who crave community with their peers, but also want to maintain an independent and autonomous lifestyle.

    In some cases, amenities like dining services, housekeeping, home maintenance and organized activities ease the burdens of senior living without being intrusive. Health care services, however, are minimal or non-existent, which makes independent living impractical for seniors who have or anticipate having significant medical needs.

  • Assisted Living

    Assisted living communities resemble independent living communities in important ways. They offer many of the same amenities, for example, which affords seniors ample amounts of community, convenience and independence. The main difference is the availability of onsite care for older adults who still want to be as autonomous as they can be — but nevertheless require a little extra help with daily activities like medication management, bathing, dressing and transportation.

  • Memory Care Communities

    Memory care communities are assisted living communities designed to accommodate seniors with special needs resulting from cognitive illnesses like Alzheimer’s disease and dementia. Alzheimer’s and dementia care figure prominently, and communities typically have special security features—for example, alarmed exits in case residents wander or even monitoring technology that helps identify health declines or fall risk early—that are designed to keep residents safe. Even organized activities are designed with memory care in mind, with options like music and art therapy looming large.
  • Skilled Nursing Facilities

    Skilled nursing facilities provide 24-hour supervised care for older adults who have severe physical or cognitive illnesses that make it difficult—and often impossible—for them to remain self-sufficient. Although medical care is of primary concern, amenities and activities remain important in order to give residents the comfortable, active, sociable life they want in their later years, regardless of their physical and mental abilities.
  • Life Plan Communities

    Life plan communities—also known as continuing care retirement communities, or CCRCs—are designed to accommodate seniors as their needs change over time. They typically offer independent living, assisted living, memory care and skilled nursing all within the same community so that older adults can live out their retirement in one place and with one plan, knowing that they will remain comfortable and cared for no matter what the future brings.

Better Living Through
a Better Lifestyle

In case the benefits of senior living communities still are not clear, consider the many services and amenities that might be available to you:

Meal Services

Although residences may have kitchenettes or even
full kitchens, many communities also offer chef-prepared meals in onsite restaurants or dining rooms. This not only frees you from the obligation of shopping and cooking, but also ensures that you have the nutrition you need to maintain your health and wellness as you age.

Housekeeping

As you get older, routine tasks like cleaning and laundry can become not only cumbersome and uncomfortable, but also dangerous. Falling on a wet floor, for example, or lugging a heavy laundry basket could lead to serious injury. A community that offers housekeeping services can therefore be a lifesaver—both figuratively and literally.

Home Maintenance

You should spend your retirement holding winning bridge hands and yoga poses, not hammers and hedge trimmers. Whether you’re used to DIY or hired help, communities that offer home maintenance services free you from the hassle, expense and safety risks of home repairs and yardwork so you can spend your time, money and energy on hobbies instead of chores.

Although residences may have kitchenettes or even full kitchens, many communities also offer chef-prepared meals in onsite restaurants or dining rooms.

Exercise and Fitness Programs

Because fitness keeps your body strong and your mind sharp, exercise is as important for seniors as it is for anyone else. Thanks to gyms, group fitness classes, spas and other amenities, many senior living communities make health and wellness easy and fun.

Social Events and Activities

Whatever you love —gardening, crafting, museums, shopping, theater, art, music, volunteerism—senior living communities often have social directors who dedicate themselves to creating organized opportunities for you to enjoy your favorite hobbies and interests, and to discover new ones. Plus, their very nature means communities lend themselves to impromptu social engagements like outdoor walks, card games and coffee dates. The genuine friendships that can be hard to build elsewhere are therefore easy to cultivate in senior living communities, which ensures a life that’s as rich with relationships as it is with experiences.

Transportation

Driving becomes more difficult and dangerous with age, which often limits seniors’ mobility. Because many of them offer scheduled and on-demand transportation to activities, entertainment and appointments, senior living communities make it possible for you to stay connected to the larger community—even after you decide to retire your car keys.

Medical Services

From routine needs like medication management and blood pressure monitoring to emergency services in the event of a serious accident or illness, many senior living communities offer onsite medical care that gives residents both protection and peace of mind. Many even offer memory care and 24-hour skilled nursing for seniors who need them.

Security and Supervision

Older adults may feel vulnerable to crime and other misdeeds. In communities that offer them, security services can therefore be a significant comfort. And for seniors with special needs, like those receiving Alzheimer’s care or dementia care, so can the protective supervision of staff who are attuned to their unique needs and risks.

Manageable Expenses

Although price points and cost structures vary from community to community and from region to region, many senior living communities offer flexible pricing that simplifies and solidifies seniors’ finances so they can keep their retirement plan on track. Many communities, for example, charge a base rate that’s determined by the size and type of one’s residence, which includes access to services like dining and social activities. Health care costs are billed separately, with tiered options based on different levels of care. The result is an experience that’s tailored not only to your goals and lifestyle, but also to your budget.

Now What?

Make no mistake: You have a big choice in front of you. Along with your wishes for retirement and your fears about it, there are practical considerations like cost—which isn’t as straightforward as it seems. If you’re thinking about aging in place, for example, you might own your home outright, in which case you have no mortgage payment. But what happens when your roof needs to be replaced, or your basement floods? With a senior living community, on the other hand, there are rent payments to make, but they are consistent, predictable and oftentimes inclusive of meals, maintenance and other variable expenses.

Because it’s apples and oranges, making the best possible decision for your future requires more than comparing price tags—i.e., what you pay. Also, it requires comparing value—i.e., what you get. When you think about it that way, some of the blurriest aspects of retirement planning finally come into focus.

Again, mountain climbing comes to mind. In particular, a quote by legendary mountaineer John Muir, whose famous advice to humanity was to “climb the mountains and get their good tidings.” You’ve spent your life climbing; now it’s time for the tidings. If you didn’t realize it before, you know it now: Senior living communities have lots of them.

You’ve spent your life climbing; now it’s time for the tidings.

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Retirement ROI: Understanding the Costs and Benefits of Senior Living

A Claiborne Senior Living Guide
A senior living community might be more affordable than you think. Here’s what you can expect to pay for, and what you’ll get for your money.
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Building Your Future Starts With Budgeting for It

Before you decided whether to live in a senior living community, you must determine whether you can afford to.

Close up of hydrangea flowers

If you’re like most Americans, you’ve spent years—decades, even—saving money for retirement. When it gets down to brass tacks, however, you haven’t really thought about how you’re going to spend that money. You may have vague notions that you need housing and health care, or that you want to be active and travel, but you’d be hard-pressed to say whether your resources will actually support your goals, or for how long.

That’s OK. Everyone has to start somewhere. And if you or a loved one is thinking about moving to a senior living community, understanding what the costs are and how they’re structured is as good a place to start as any.

Before you start crunching numbers, there are a few things you should understand.

  • Costs need context. When you begin assessing the costs of senior housing, it’s normal to feel something akin to sticker shock. But big numbers are rarely as large as they initially seem. When you consider what expenses they encompass and over what period of time, and compare that to the equivalent cost of living outside of senior housing, you’ll often determine that the price tag is more affordable than it appeared on first glance.
  • Senior living is not one-size-fits-all. If you browse the web, talk to friends and family members who have firsthand experience, or commence discussions with specific communities, you might blush at the numbers. But it’s important to keep in mind that those are not your numbers. The truth is, senior living communities boast a wide variety of options at a wide variety of price points in order to appeal to as many potential residents as possible. Before you commit to living in a senior living community—or rule the prospect out—it’s important to examine your unique needs and resources. Then and only then can you paint a complete financial picture.
  • Communities can help you navigate your options. Senior living communities have specialized staff and software that can help you assess the affordability of senior housing based on your age, assets and monthly income from Social Security, pensions, investments and other resources. If there is a divide between your resources and your goals, they might be able to draw on their daily experience working with residents of diverse means to suggest avenues and ideas that can help you bridge any gaps.

It’s right to be thinking about the cost of senior living communities. Before you rush to judgment, however, use this guide to get a general sense of what expenses you might encounter and what services you’ll get in return. Once you’ve acquired some basic literacy about the financial aspects of senior housing, you can begin the process of determining what your situation may require and what the impact might be on your family, finances and lifestyle.

Two women facing each other in conversation
magnolia flower

Understanding what the costs are and how they’re structured is as good a place to start as any.

House with large front porch

1. Housing Costs

Older adults who live in senior housing typically must concern themselves with three principal costs, the first of which is housing.

For most of your adult life, you’ve probably had a rent or mortgage payment. Although it might be called something different, you’ll have a similar housing payment when you live in a senior living community. How much that payment is and how it’s structured will vary from community to community based on factors such as community size, location and type— for example, an independent living community where residents are entirely self-sufficient, an assisted living community where residents may receive assistance with activities of daily living, a memory care community that furnishes specialized care for people with Alzheimer’s disease or other forms of dementia, or a skilled nursing facility that offers 24/7 medical care.

RENTAL COMMUNITIES

In some senior living communities, like independent living communities, residents might sign traditional leases that are similar in terms and cost to those of a conventional apartment. Leases might be month-to-month or annual, and might include a security deposit and/or move-in fee that’s typically equal to one month’s rent. Sometimes, amenities and services are ad hoc. Other times, residents enter into a residence and service agreement that encompasses both rent and various onsite services for a single monthly sum. This is especially common in assisted living, memory care and skilled nursing communities. Although rental housing tends to be more affordable up front, it tends to be less predictable and can be more expensive over time since services are extra.

OWNERSHIP OR EQUITY COMMUNITIES

In an ownership- or equity-style senior living community, residents purchase their unit, pay real estate taxes on it and are responsible for its upkeep, just like a traditional home. They may pay additional homeowners association dues in exchange for certain amenities, and may have access to additional services, like assisted living, for an additional daily or monthly fee. Equity arrangements may be attractive for estate planning purposes, but provide no relief from the burdens of homeownership.

Equity arrangements may be attractive for
estate planning purposes, but provide no relief from the burdens of homeownership.

Happy senior mother with adult daughter sitting on couch and holding cups with coffee or tea at home. Togetherness concept

LIFE PLAN COMMUNITIES

Also known as continuing care retirement communities (CCRCs), life plan communities offer myriad levels of care on the same campus in order to accommodate seniors as they age. In exchange for long-term stability and flexibility, they typically charge a significant “entrance fee”—basically, a down payment that must be paid prior to moving in, which often is funded with proceeds from a home sale. Entrance fees can be non-repayable or repayable. The former are lower but non-refundable if a resident moves out or passes away. The latter, on the other hand, are higher but offer generous repayment in the event of a move or death, which can be attractive for estate planning purposes. Although the initial price tag may appear large, the long-term value often exceeds the short-term investment.

2. Monthly Service Fees

Often, communities offer other amenities and services that are paid out of pocket as needed.

Whether you pay them in the form of monthly rent or upfront entrance fees, housing costs typically cover only the roof over your head. Some senior living communities fold an array of services and amenities into that cost; others charge a separate monthly service fee. Make sure you know what’s included and what isn’t in any discussion you’re having with a community! Like the fees themselves, the services they include will vary from community to community. However, they might include things like:

  • Meals and dining
  • Utilities
  • Home maintenance and repairs
  • Housekeeping
  • Laundry services
  • Local transportation
  • Fitness facilities
  • Resort-style amenities like swimming pools and putting greens
  • Organized social activities and entertainment
  • Nursing services in case of mild illness or injury

Often, communities offer other amenities and services that are paid out of pocket as needed—for example, dry cleaning, an onsite beauty salon, extra housekeeping services or extra meals for visitors.

Keep in mind that because of inflation and other economic variables like the cost of gas and food, monthly service fees may increase over time—typically by less than 5 percent per year. Fortunately, services often can flex with one’s budget. In many cases, for example, services can be customized to residents’ needs. A resident who prefers to cook their own meals in their residence, for example, might pay a lower service fee than a resident who desires a meal plan in the dining hall.

Make sure you know what’s included and
what isn’t in any discussion you’re having with a community.

Parkinson disease patient, Alzheimer elderly senior, Arthritis person hand in support of nursing family caregiver care for disability awareness day, National care givers month, ageing society concept

3. Health Care Costs

As they age, older adults often need increased medical assistance and services.

As they age, older adults often need increased medical assistance and services. Although it can be difficult if not impossible to predict one’s future needs, more support naturally translates into greater expense.

Some senior living communities offer residents a means to mitigate those financial risks by offering onsite health care services whose costs are built into the community’s monthly service fees, thereby allowing residents to lock in low prices for future care. This is the case, for example, in life plan communities, which typically offer multiple contract options for residents who may need health care support now or in the future. Some residents may elect to pay a higher monthly fee that promises to cover all their needs over time, regardless of what level of care they need. Other residents may elect to pay graduated monthly fees that start small but grow as their needs increase. Still others may desire a monthly fee that remains consistently low, in which case they’ll pay ad hoc for higher levels of care should they ever need them.

Some senior living communities—especially those owned by nonprofit organizations—may offer benevolence programs and subsidies for qualifying residents, who may be able to continue receiving care if health care costs deplete their assets. And most communities offer social, fitness and wellness programs that can keep residents’ future health care costs in check by keeping their bodies strong, their minds sharp and their spirits high.

Although it can be difficult if not impossible to predict one’s future needs, more support naturally translates into greater expense.

Group of senior women friends with coffee sitting outdoors on terrace, resting.

Aging in Place Isn’t Free

As you contemplate the costs of a senior living community, it’s natural to wonder, “Wouldn’t it be cheaper to continue living in my home?” The answer might surprise you.

Here’s why: When you’re crunching the numbers for senior housing, you must consider not only what expenses you will have, but also what expenses you won’t have. Depending on what type of senior living community you select and what services it offers, you might be able to eliminate the following expenses from your monthly budget:

  • Mortgage payments
  • Homeowner’s insurance
  • Property taxes
  • Landscaping
  • Cleaning services
  • Car payments, auto insurance, maintenance and fuel costs
  • Utilities
  • Groceries
  • Entertainment

That’s just the beginning. You also will eliminate spending on home maintenance and repairs—including expensive replacements of your roof, hot water heater, appliances and HVAC equipment, all of which have expiration dates. There are home modifications, too: If you age in place, you’ll eventually have to spend money making your home safe for an older adult to live in. If you move to a senior living community, however, safety upgrades like ramps and bathroom grab bars already will be installed at no expense to you. And don’t forget about health care. If you age in place, you may eventually need in-home assistance and medical services, which don’t come cheap. Seniors who do the math in order to compare what they’ll spend with what they’ll save often discover that a senior living community is just as affordable—and sometimes even more so—than aging in place.

When you’re crunching the numbers for senior housing, you must consider not only what expenses you will have, but also what expenses you won’t have.

Group of senior women friends with coffee sitting outdoors on terrace, resting.

So, Should You Move into a Senior Living Community?

If you want to know the answer, follow the money.

Whether to move into a senior living community is a decision that seniors and their loved ones often make with the heart. But a decision of such import can’t be made on gut feelings alone. You also have to listen to the numbers.

That requires facts. To get them, make a list of your current resources and expenses, then speak with the sales counselors at prospective communities in order to get a complete and accurate picture of the scenarios available to you, what they’ll cost and what options exist for financing them. Finally, meet with your financial advisor in order to compare current resources and expenses with prospective needs and costs. From that, you should gain a good understanding of whether you can move into a senior living community, at which point you can finally consult your heart for an answer to the question you began with: Should you?

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Because You’re Worth It: Your Guide to Financing Senior Living

A Claiborne Senior Living Guide
You don’t have to be rich to find enrichment at a senior living community. You just have to be prepared.
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Your Best Investment Is Yourself

A senior living community is an expense.
But it’s also an investment.

Financially speaking, adulthood is all about saving for the future. Wherever you put your money—stocks and bonds, a high-interest savings account, a tax-advantaged retirement vehicle, real estate or an ill-advised shoebox under your bed—you probably put it there for a singular purpose: so that you’d have it someday when you needed it.

What you might not realize, however, is that “someday” is today. If you or a loved one is approaching retirement age, or have reached it already, this is the moment you’ve been waiting for. It’s time to decide what you want your golden years to look like, and to set in motion the well-laid plans that will help you make your dreams and goals a reality. Not tomorrow. Not eventually. Not sooner or later. But now. Because if not now, when?

That’s not to say that cashing in your chips is easy. It isn’t. If you’re like most seniors, you probably feel like you don’t have enough. Saving your money makes you feel secure. Spending it makes you feel anxious. If your retirement goals involve moving to a senior living community, however, you should know that what initially looks like spending your money is actually re-investing it. Like a bank that’s loaning capital to a small business, you’re funding your future in exchange for a promising return. Only your return isn’t principal and interest; it’s health and happiness.

Not tomorrow.
Not eventually.
Not sooner or later. But Now.
Because if not now, when?

There can be financial returns, too. Although the costs often are incremental and therefore less obvious, aging in place can be deceptively expensive whereas senior living communities can be surprisingly affordable.

Especially today. Thanks to a “retirement renaissance,” senior housing has proliferated. Forget the nursing home of decades past. Today, there’s an unprecedented array of choices for seniors who want to live their best lives, regardless of their age, health status, retirement income or budget.

To find a senior living community that meets your needs without exceeding your means, you’ll need to understand the costs involved, then investigate what assets and options you have available. Here’s the good news: There are more assets and options available than you probably realize. Once you have a sense for them, what once felt extremely daunting might suddenly feel entirely doable.


magnolia flower

Aging in place can be deceptively expensive whereas senior living communities can be surprisingly affordable.

First, Make a Budget

Step one is determining what you have and what you need

No matter what kind of senior living community you want to live in—a retirement community with independent living, an assisted living community or a memory care community that offers Alzheimer’s and dementia care—the first thing you need to do is determine what it will cost you to live there.

The sales counselors at prospective communities can help you estimate your costs. Depending on the community, for example, you’ll have to pay either monthly rent or a larger entry fee that’s akin to the down payment on a house. You’ll also have to consider ongoing expenses like meals, utilities, home maintenance, housekeeping, transportation and entertainment, which communities may or may not offer in exchange for a monthly service fee. And don’t forget health care, including medical needs you have now and those you might have in the future.

Once you have a grip on how much money you’ll need to live in a senior living community, it’s a good idea to take inventory of what resources you have to help you cover the costs. This includes not only savings and income—Social Security and pensions, for example—but also assets like your home, vehicle, investments and even valuables like art, antiques, jewelry and collectibles. Some of your assets might be liquid while others might take more time and effort to convert into cash. Talking to a financial advisor can help you understand what money you have and how to best access it for purposes of funding senior housing.

Your timeline should figure prominently. Do you want to move immediately or a few years down the line? Understanding when you will need money is just as important to your calculations as understanding how much you’ll need.

It’s a good idea to take inventory of what resources you have to help you cover the costs.

Making Aging Affordable

There are more ways than you think to fill the gap.

If your budget reveals a shortfall between what you have and what you need, don’t fret. There are myriad ways to finance your move to a senior living community. Here are a few of the most common that you might consider.

REAL ESTATE

If you own your home, it’s probably your biggest asset. That means it might also be your easiest ticket to a senior living community.

If you have enough equity, you might consider selling your home outright, in which case you’ll basically be exchanging one home for another. In fact, proceeds from a home sale may cover all or most of the entry fee at a senior living community that charges one. And the money you’ll save on real estate taxes and future home repairs can be directed instead toward monthly service fees and various other daily living expenses.

Of course, home sales can take a while. If time is of the essence, a bridge loan might be helpful by giving you short-term capital with which to finance your move to a senior living while you wait for your home to sell; when it does, you can use the proceeds to repay the loan.

Of course, all of this assumes that you can sell your home quickly and for a fair price. If you can’t, there are other options. You might look into a reverse mortgage, for example, wherein you sell your home a little bit at a time back to the bank, which cuts you a monthly check in exchange for your returned equity. Or, if your home is in good shape and your local rental market is strong, you might consider renting your home until you’re ready to sell it. Although being a landlord can be quite onerous, a good property manager typically can do everything for you.

Proceeds from a home sale may cover all or most of the entry fee at a senior living community that charges one.

Insurance

If you have a life insurance policy that you no longer need, you may be able to sell it to a life settlement company in return for a lump sum that you can apply toward your entry fee at a senior living community or other senior housing costs. Although the company won’t purchase it for the policy’s full value, you typically can get more money than you otherwise would if you were to simply surrender the policy or allow it to lapse. Before you go this route, however, you should be certain that you want to give up your life insurance—you may not be able to qualify for a new policy if you decide later that you want one—and should be prepared to shop your policy around to different companies to ensure you’re getting a fair price.

Before you sell your life insurance, there are other options to consider. You should check with your insurer, for example, to find out whether you can borrow against your policy. If you’re ill, you might also be eligible for accelerated death benefits that cover the costs of a longterm, catastrophic or terminal illness while you’re still alive.

If you have long-term care insurance, that might also come into play. Depending on both the policy and your health status, you may be able to access benefits to help you pay for the cost of an assisted living, memory care or skilled nursing community.

Veterans Benefits

If you or your spouse is a veteran who served in active duty during wartime, you may be able to receive a federal benefit known as the Veterans Aid & Attendance benefit. Provided above and beyond a veteran’s regular pension, it can be used to cover your care in an assisted living, memory care or skilled nursing community.

You may be eligible for this benefit if you receive a VA pension and meet at least one of these requirements:

  • You need another person to help you perform daily activities like bathing, feeding and dressing, or
  • You have to stay in bed or spend a large portion of the day in bed due to illness, or
  • You’re a patient in a nursing home due to the loss of mental or physical abilities related to a disability, or
  • Your eyesight is limited, even with glasses or contact lenses

If you are a veteran or the surviving spouse of a vet, it’s well worth your time to explore this option as a potential supplement to your other benefits and resources.

If you or your spouse is a veteran who served in active duty during wartime, you may be able to receive the Veterans Aid & Attendance benefit.

Frequently Asked Questions

In your search to find senior housing –
and pay for it – knowledge is power.

By now you can see that there are numerous financial paths one can follow to put life in a senior living community within reach. But you and your bank account probably still have some questions. That’s normal. Although you should discuss any lingering concerns with your financial advisor and with the sales counselors at communities you’re considering, here are a few of seniors’ most common queries.

Will Medicare pay for a senior living community?

Unfortunately, Medicare does not cover most costs associated with living in a senior living community. One exception is skilled nursing: Medicare will pay 100 percent of the cost of care up to 20 days at a skilled nursing facility and approximately 80 percent of the cost up to 80 more days. However, that care must be for recovery following an inpatient hospital stay.

Medicare doesn’t cover room and board or custodial (personal) care costs in assisted living communities, although some Medicare Advantage plans may pay for personal care assistance in assisted living or memory care (but not room and board).

Medicare also will pay for “medically necessary” care outside of a hospital, which means some medical services that may be offered at an assisted living or memory care community—physical or occupational therapy, for example, or diagnostic testing. That won’t eliminate all your senior housing expenses, but it might make a dent in them if you need a certain level of care.

Some senior living communities also offer benevolence programs and subsidies for qulaifying residents.

What about Medicaid?

Although Medicare won’t pay for a senior living community, Medicaid might. Like Medicare, Medicaid in some states will pay for medically necessary care outside of a hospital setting, including some medical services that might be available at an assisted living or memory care community. In the case of memory care, Medicaid might also cover the larger costs of living in a community—provided that community has a Medicaid contract. Of course, you must be eligible for Medicaid in the first place, which means you must have a very low income and few assets.

I have the money now. But what if I run out of money later?

Policies vary from community to community and from circumstance to circumstance. Some communities are structured like apartment rentals, in which case nonpayment of rent will be a breach of your lease that leads to eviction. Other communities—including many life care communities—offer contracts that guarantee lifetime residence; as long as you pay your entry fee, you’ll have a home there for life. Some senior living communities also offer benevolence programs and subsidies for qualifying residents, who may be able to continue receiving care if health care costs deplete their assets. Because communities vary, it’s important to ask what a community’s policies are before you sign a contract or lease.

If you move to a community that charges an entrance fee, that fee may be refundable.

How will senior housing affect my taxes?

You can’t talk money without talking taxes. Fortunately, moving to a senior living community might actually help your tax bill. That’s because residents of some communities may qualify for a substantial tax deduction. Specifically, residents of life care communities or other “entry fee retirement communities,” who may be able to deduct a portion of their entry fee as well as a portion of their monthly service fees—provided those fees qualify as a prepaid health care expense. Whether they do will depend on what type of contract you sign with a community. If you sign a life care contract, for example—which provides for your changing health care needs as you age—you almost certainly qualify for a tax break. If you sign a modified life care contract that provides for some but not all medical needs, you might still qualify for some deductions. And if you sign a fee-for-service contract, your deductions will be minimal.

Will I still be able to leave an inheritance for my loved ones?

If you move to a community that charges an entrance fee, that fee may be refundable up to a certain amount in the event of your death. A refundable entrance fee is typically higher than a non-refundable one, but may provide reassurance for residents who wish to leave something behind for their loved ones.

Life on Your Terms: Priceless

Your wellbeing is an investment worth making.

At first glance, the cost of senior housing can feel overwhelming. Like every investment you’ve ever made, however—your first home when it was time to start a family, the new car you couldn’t wait to drive, the dream vacation you’ll always remember—the price tag on a senior living community tells only part of the story. Just as important as the cost is the benefit. Because you’re not just spending money. You’re getting something in return. And what you’re getting isn’t merely a place to live. It’s health and happiness. It’s independence and autonomy. It’s safety and security. It’s community and comfort. More than anything, though, it’s a future. And isn’t that what you’ve been saving for all along?

When you take a thorough look at the resources you have and the life you’ll be able to live, you might realize that a senior living community is more attractive, attainable and affordable than you imagined.

You’re not just spending money. You’re getting something in return.

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