For seniors, one of the greatest concerns is how to finance life after retirement. Where to live, how to enjoy life and how to pay for it top the list for many. There are many ways to go about preparing for financing your senior years, as well as many misperceptions that can throw a wrench into a happy and secure retirement. While planning for senior life, take a look at some of the facts and fiction around financing senior living.
Fact: Most people pay for their senior years – at least in part – with Social Security.
Depending on the age at which a senior begins to receive Social Security and how much they earned over their career, the amount will vary with the highest amount being available at the latest age to receive full benefits. For those born from 1943 to 1954 that age is 66. For birth dates in 1955 to 1960, it increases gradually to age 67, which is the full retirement age for everyone born in or after 1960. Those who chose to retire at age 62 (the earliest possible age to receive Social Security) will receive smaller monthly benefit amounts because they will be spread out over more years. For those who chose to wait past their full retirement date, retirement benefits continue to increase up to age 70. Get the facts before you plan to retire from the Social Security Administration.
Fiction: Medicare will help finance senior living.
Medicare is federally provided health care that working people pay into during their careers. It becomes available at age 65 to everyone of every income, and earlier if a young person is disabled or requires dialysis or kidney transplant for End Stage Renal Disease. Medicare, however, does not pay senior living expenses such as long-term care in a senior living community, but Medicare may cover expenses in short-term skilled nursing such as for recovery from surgery or illness. Check with medicare.gov for more information.
Fact: Long-term care insurance pays for everything.
Like Medicare, long-term care insurance is for health care, not general living expenses. Moreover, there are many different kinds of long-term care insurance policies that have diverse benefits, elimination periods, limits of coverage, and of course, premiums. What is great about long-term care insurance is that it does cover care that is often not provided for under Medicare, employer health insurance or disability insurance. The money.com article, “5 Best Long-Term Care Insurance Companies of 2021,” is a good place to start to learn more about long-term care insurance.
Fiction: Veteran’s benefits cannot be used to finance senior living.
Veterans and certain of their surviving family members are often eligible for monthly Veteran’s Pension benefits if they meet age and income limits set by Congress, served in active duty during specified wartime periods, and received an honorable discharge. Some veterans and survivors may also qualify for VA Aid and Attendance benefits or Housebound allowance if they require assistance with daily activities, have a permanent disability or are housebound.
But there are rules about how the benefits can be used and when. For a more in-depth look at veteran’s benefits, check out the health.usnews.com article, “Veteran Benefits for Assisted Living.” To apply for veteran’s benefits and check eligibility go to the Veterans Administration.
Fact: Life insurance may be a source of funds for financing senior living.
Traditionally, life insurance is purchased to ensure families will be provided for financially in the event of the death of a parent or other breadwinner. But there are ways to put life insurance to work to provide money while the insured is still alive. According to the Administration for Community Living’s LongTermCare.gov website, these options are:
Combination (Life/Long-Term Care) Products, which are new on the scene and provide benefits “that will always be paid, in one form or another.”
Accelerated Death Benefits (ADBs), which provide for a tax-free advance on the death benefit before the senior dies, but under specific circumstances that include:
- You are terminally ill.
- You have a life-threatening diagnosis, such as AIDS.
- You need long-term care services for an extended amount of time.
- You are permanently confined to a nursing home and incapable of performing Activities of Daily Living (ADL), such as bathing or dressing.
The amount of benefit that can be received is generally capped at 50% of the death benefit but may vary from policy to policy.
Life settlements are policies that offer the option of selling the policy for its present value to provide cash. There are age requirements for both men and women, the funds received may be taxed, and taking the funds will deplete the amount left to heirs.
Viatical settlements allow the sale of a life insurance policy to a third party to provide funds for long-term care in the event the insured is terminally ill. Use of a viatical settlement means there will be no death benefit to heirs and the payments are determined based upon life expectancy as determined by the National Association of Insurance Commissioners.
At North Chandler Place, our job is to help our residents make the most of life and enjoy great times, good friends and the peace of mind that comes with safety and security. To learn more about North Chandler Place senior living options and amenities, contact us today!