So you’ve decided you or your loved one needs senior living – how much is it going to cost?
A 2023 study by Genworth determined that the U.S. average for assisted living is $5,350 a month, though it could be less (or even more) depending on where you live!
Budget is a huge factor in determining what’s available to you. Unfortunately, there’s also a huge misconception that Medicare will cover the cost.
That is simply not the case.
Before diving into how to pay, it's helpful to understand what kinds of senior housing are available. These range from senior apartments and independent living (which are typically for active seniors who don’t need daily assistance) to assisted living, memory care, and residential care homes, where help with daily activities is provided.
No matter the type of senior housing, most of it is private pay, meaning it’s up to the individual or family to cover the costs. So, where does the Money come from? Let’s explore the options.
This includes:
Retirement accounts (401(k), IRAs, pensions)
Personal savings
Stocks, bonds, and mutual funds
These financial resources are often the first place families look when covering senior living expenses.
Many seniors rely on their monthly Social Security payments to help with living costs. While this usually won’t cover the full cost of senior living, it can help supplement other financial resources.
If your loved one owns a home, selling it can free up significant funds to cover senior housing. Many seniors have built substantial equity in their homes over the years, making this a primary way to pay for long-term care.
A reverse mortgage allows homeowners aged 62 and older to convert home equity into cash while continuing to live in their home. This can be useful for covering in-home care or bridging the financial gap before transitioning to senior housing.
Some life insurance policies can be cashed out or borrowed against to help pay for senior living. However, this option depends on the specific policy and terms, so it’s important to check with the insurance provider.
While Medicare doesn’t cover most senior living costs, there are a few government programs that can help in specific situations.
If your loved one is a veteran or the spouse of a veteran, they may qualify for the VA Aid & Attendance benefit. This program provides financial assistance for those needing help with daily activities, including assisted living and memory care.
Medicaid is a state and federally funded program for low-income seniors. While Medicaid does not cover independent living, it may cover Nursing home costs and, in some states, some assisted living expenses. Each state has different rules, so check local Medicaid guidelines.
Some long-term care insurance policies cover assisted living, memory care, and in-home care. These policies typically require the policyholder to need assistance with daily activities (bathing, dressing, etc.) before benefits kick in. However, coverage varies greatly by plan, so reviewing policy details is essential.
Adult children or other relatives sometimes contribute to senior housing costs. This can be a formal arrangement or a pooled fund among siblings to help share the expense.
Bridge loans can be helpful if funds are tied up in a home sale or other assets. These short-term loans provide temporary financial support until a more permanent funding source becomes available.
If selling isn’t an option, renting out the home can provide ongoing income to cover senior living costs.
Some seniors prefer to stay at home and bring in caregivers. Here’s how different types of care are paid for:
Non-Medical Home Care (Caregivers, Companions, etc.): Private pay (savings, Social Security, long-term care insurance, VA benefits)
Home Healthcare (Skilled Nurses, Physical Therapy, etc.): Covered by Medicare if prescribed by a doctor after hospitalization
If your loved one is at the end-of-life stage, Hospice care is covered by Medicare. However, families should note that once someone enters hospice, they cannot continue receiving other Medicare-funded therapies like physical therapy.
The best way to prepare for senior living expenses is to plan ahead. Have conversations early with your loved ones about their financial situation, preferences, and potential care needs. Explore all available funding options and consider consulting a financial advisor who specializes in senior care planning.
Paying for senior living can feel overwhelming, but with the right information, you can make confident decisions. Whether using savings, VA benefits, Medicaid, or private pay, there are multiple ways to fund senior housing and care.
The key is knowing your options and planning ahead to make the transition as smooth as possible for you and your loved one.
If you found this guide helpful, share it with friends and family who may be facing similar decisions!
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Originally Published on https://www.loriwilliams-seniorservices.com/
Owner/Founder of Lori Williams - Senior Services. I’ve worked in senior living for over 16 years. My passion for learning all I could about aging, dementia and resources for older adults was inspired by my grandmother who was diagnosed with dementia in 1994. I am also the creator and host of the podcast, Aging in Style. The purpose of the podcast is to educate on all things senior related and to share stories of inspirational seniors.
I have a degree in Marketing from LSU, and I am a Certified Senior Advisor and a Certified Dementia Practitioner.
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