With over 10,000 Baby Boomers reaching average retirement age every day, the importance of specialized care and support grows. Senior housing facilities create a safe and comfortable haven for older adults, offering help with daily tasks while prioritizing their well-being.
However, the financial burden placed on families due to the costs associated with such services cannot be overlooked. To ensure our seniors receive deserving care without compromising their quality of life, understanding the available financing options is essential.
In this article, we’ll explore a range of financing options to cover the costs of senior housing. Whether you’re a family member researching options for your aging loved one or a senior seeking financial assistance for your own care, we’ll provide valuable insights and practical guidance.
Taking Out a Reverse Mortgage Loan
Many seniors over the age of 62 are now applying for a reverse mortgage loan to access home equity without having to sell their property. But what is a reverse mortgage and how does it work exactly? It’s fairly simple; a reverse mortgage gives senior homeowners the opportunity to receive payments from the lender in the form of either one-time payments, regular monthly payments, or a line of credit. The amount of money you’ll receive depends on the youngest borrower’s age, the property’s market value, and the interest rates at the time you apply.
Repayment of a reverse mortgage is not required until the borrower sells the property, moves out, or passes away. In other words, if you opt for a reverse mortgage to cover your senior housing costs, your spouse must still be planning to live in the house. In addition, you have to keep in mind that if there is still a mortgage on the property, the funds from the reverse mortgage loan must first be used to pay that off.
If you decide to apply for a reverse mortgage loan, first, you’ll have to meet with a reverse mortgage advisor who will review your current financial situation to help you decide whether this is the right financing option for you.
Relying on Annuity Income
For retirement and other long-term financial needs, many people choose to enter into an annuity contract with an insurance provider. There are many varieties of annuities, each with its own set of advantages and disadvantages. You can pay the insurance company in a lump sum or over time with installment payments. These payouts could start immediately or at some point in the future.
Some retirees choose annuities as a way to convert their savings into a reliable source of income in order to cover the cost of senior housing and other forms of long-term care since they know their money will grow steadily over time.
Taking Out a Bridge Loan
Bridge loans are an option that comes with a high degree of risk and should only be pursued with caution. Seniors whose financial conditions are not favorable to a shift to long-term care may find that these short-term loans are suitable for their needs at this time.
A frequent way for seniors to pay for senior housing, for instance, is to sell their houses. This plan, however, could fall apart if their care needs suddenly became too urgent to wait until the house sold before moving.
For individuals suffering from conditions beyond their control, a bridge loan may be a realistic choice for temporarily affording their treatment. In this scenario, the senior is counting on the sale of their property to settle the cost of the loan within the agreed-upon time frame (often six to twelve months).
Submitting a Claim for VA Benefits
Some military veterans (and their surviving spouses) with poor income and few assets are eligible for pension funds from the U.S. Department of Veterans Affairs (VA). The Aid and Attendance benefit is an “increased” monthly stipend that many veterans and their families don’t know about. If a veteran or surviving spouse qualifies for a pension and needs help with activities of daily life, they will get a larger allowance.
The maximum VA Aid and Attendance pension rates for 2023 are:
- $26,752 yearly for a veteran with no dependents.
- $31,714 yearly for a veteran with at least one dependent spouse or child.
- $31,714 yearly if one veteran spouse is qualified and $42,433 if both veteran spouses are qualified.
Final Thoughts
When it comes to financing options to cover senior housing costs, this list is not comprehensive, but it is a great reference point to begin your research. Do your homework, consult with many lenders, and bear in mind that everyone’s situation is unique. The financing choice that works best for you and your financial situation may be on this list. Good luck!
