One of the last things many people want to discuss when you or a loved one is considering moving to a senior living community is the cost. We all like to believe there are no limits to the life we can offer, but early discussions regarding financial considerations can help ensure this transition goes smoothly.
Some options you can explore when deciding how to pay for memory care include:
- Disbursements from personal retirement and pension plans
- Equity from the sale of your home
- A bridge loan or home equity loan
- Veterans Affairs Aid and Attendance benefits
- Sale of stocks and securities
- Life settlement income
Financing memory care can seem overwhelming, but with thoughtful planning, you can embrace all that senior living has to offer!
What is Memory Care?
Memory care is a specialized type of care that is specifically designed for individuals suffering from dementia or Alzheimer’s. It involves services and support specifically designed to help individuals manage their symptoms and live a fulfilling life.
Financing Memory Care
The cost of memory care varies, but it’s generally higher than independent senior living. While the cost of memory care can appear daunting, fixed monthly costs and cutting real estate taxes can reduce expenses to the point expenses could actually remain similar to your current living situation!
Personal Retirement & Pension Plans
You spent a good part of your life putting money into your retirement and pension plans. These funds are there for your needs as you age, and it could be a good idea to consider using them to cover the costs of memory care.
Retirement accounts, like an IRA or 401(k), allow you to withdraw funds without penalties once you reach a certain age—typically 59.5 years old. It’s your money, and you’ve saved it for times exactly like these. So, you can feel confident about using these funds when you need them most.
Pension plans work a bit differently. After you retire with a pension, you’ll receive regular payouts. You can use these payments to help cover the costs of memory care.
Equity from a Home Sale
Equity is essentially the amount your home is worth minus any mortgage or loans tied to the property. In other words, if you sell your home, the equity is the amount of money you’d have left after paying off any outstanding debts on the property.
Let’s say you’re planning to move into a senior living community and you don’t need to maintain your current home anymore. Selling your home could give you a significant lump sum of money. This is your equity. It’s a pretty straightforward way of tapping into a large asset that you’ve invested in over the years.
Bridge Loan or Home Equity Loan
A bridge loan is a type of short-term loan often used in real estate that “bridges” the gap between selling your current home and buying a new one. Let’s say you’re planning to sell your home to fund your memory care, but the sale’s taking longer than you anticipated. A bridge loan can provide you with the funds you need in the meantime. Once your home sells, you’ll then pay off the bridge loan.
On the other hand, a home equity loan allows you to borrow against your house’s equity. It’s like taking out a second mortgage on your house, and you receive the money as a lump sum.
Personal loans are also an option, and some companies even specialize in senior living loans.
Keep in mind: all loans involve borrowing money, so they come with interest rates and require you to eventually pay them back. It’s important to understand all the terms before deciding if this is the right path for you.
Veterans Affairs Aid & Attendance Benefits
VA Aid and Attendance benefits provide additional financial support to veterans or their surviving spouses who require assistance with their daily living activities. These activities might include tasks like eating, bathing, dressing, or even getting around the home.
The Aid and Attendance benefits are an added amount on top of the regular monthly VA pension. Certain eligibility criteria need to be met to receive these benefits.
Selling Stocks & Securities
When you sell your stocks or securities, you’re essentially converting your investment back into cash. The amount you get depends on the current market price. Ideally, you’d sell when the price is higher than what you originally paid, making a profit.
The important thing to note here is that any profit you make from selling stocks and securities is considered capital gains and subject to taxes.
Life Settlement Income
A life settlement is when you sell your life insurance policy to a third party for more than its cash value for canceling but less than its net death benefit. In other words, you’re selling your policy for a lump sum of cash now instead of a benefit paid out to the beneficiary upon your death.
Taking Senior Living a Step Above
Financing memory care doesn’t need to be a daunting task. With options like retirement plans, loans, home equity, and investments, you’ve got a range of possibilities at your fingertips. Each option has its unique benefits, and finding the right fit depends on your individual circumstances.
That’s why it’s important to have a professional team helping you through this journey. Explore our community at Somerby Lake Nona and when you’re ready, reach out to us with any questions. We’re here to support you every step of the way.
