People are often surprised to find that in addition to the security and grand lifestyle offered, senior living is frequently more affordable than other alternatives. Yet at The Shores of Lake Phalen, we understand every person and every situation is unique and within this uniqueness, one question is common to all…how to best afford the wonderful Lake Phalen lifestyle. In recent years some new and innovative financial strategies have been developed which, when used alone or in a creative combination, can assist in overcoming budget challenges. With careful research and thoughtful consideration, these tools may allow a retiree to live comfortably and plan for future care without straining current resources. To assist you in evaluating how you can best manage the expense for yourself or for your loved one, we are happy to provide you with some resources to explore.
- Personal savings and investment income most often provide the funding to cover the monthly expenses of senior living.
- For those with a nest egg who are concerned about outliving those resources, an annuity may be a good option. When you purchase an annuity, you pay a lump sum up front and receive regular payments back over a promised period of time, usually the rest of your life. An annuity can help you stretch your budget and be sure you’ll always have at least some money coming in, even if you live longer than you expect. Annuities are complex financial tools and there are many variations. Be very cautious when investing in annuities—be sure to talk with a trusted financial advisor with a reputable company about the options appropriate for your situation as there are many unscrupulous marketing schemes targeting vulnerable seniors.
Options for Homeowners
- The sale of the resident’s real estate is a common source of funding.
- Some retirees prefer to retain the property, but choose to borrow against the equity in the home or create a reverse mortgage to provide income.
- With the assistance of a property management service, retirees may choose to create an income stream by leasing their home.
- A sudden decline in health may create a more immediate need to relocate. In such cases a homeowner may work with a bank using the option of an interest-only ‘bridge’ loan until the home sells.
- For retirees with investment portfolios, the major wire houses such as Morgan Stanley and Merrill Lynch have credit lines available to clients who are trying to sell a house and don’t wish to sell securities in the meantime. Each firm has a different name for the product, but each is a securities-backed loan or line of credit. These loans allow a retiree to borrow money using eligible marketable securities as collateral.
- Many creative options exist for homeowners and we urge you to speak with your local banker and a certified senior real estate specialist for more details on choices available in these fields.
More Homeowner’s Information:
National Association of Realtors
- If Long Term Care insurance has been purchased and maintained, monthly benefits will generally be paid to a resident requiring assisted living after a policy-determined waiting period (typically 60-90 days).
- For seniors owning ‘whole’ life insurance policies, some companies offer a Life Settlement product which in effect liquidates the policy providing funds to be used for living expenses, with a minor amount retained for burial expenses.
Wartime veterans (actual combat not required) or their surviving spouses may be eligible to receive up to $2000 per month to help defray the cost of assisted living or memory care through the Aid and Attendance Pension Benefit. This pension is unrelated to any disability pension. For more information about VA assistance you may locate your Regional Veteran’s Affairs office by calling 800-827-1000.
Official periods of wartime
- World War I: 5/9/1916-11/11/1918 World War II: 12/07/1941-12/31/1946
- Korean Conflict: 6/27/1950-1/31/1955 Vietnam Era: 8/5/1964-5/7/1975
- Persian Gulf: 8/20/1990-present
According to IRS Publication 502, the Internal Revenue Service offers tax deductions on some costs related to senior care for both the resident and their family caregiver. The Shores of Lake Phalen does not provide tax advice, but we encourage you to contact your tax professional for information that will be helpful to you.
Gift Tax Exemption
Family members can help with the costs of a loved one’s Senior Living expenses by taking advantage of the IRS gift tax exemption. Individuals can provide gifts of up to $14,000 per person, per year possibly without paying gift tax. Check with your tax professional about this option.
A retiree on a more limited income or who may benefit from more companionship may choose to share an apartment. This option provides all the features and benefits of the The Shores of Lake Phalen community only at a more affordable monthly rate by sharing the expense with a roommate. This can be a great option for siblings and longtime friends. Or, The Shores of Lake Phalen community may be aware of other retirees interested in sharing an apartment and can arrange a get-acquainted meeting.
Disclosure: All content contained within this page is provided for general information only, and should not be treated as a substitute for advice and information from a personal financial or tax advisor. The Shores of Lake Phalen is not a provider of any of these financial products nor do we provide any financial or tax advice. The Shores of Lake Phalen does not endorse nor take responsibility for the accuracy of the information contained above. The Shores of Lake Phalen receives no incentive compensation from the companies or products listed here. Individuals should consult with their personal financial planner or tax advisor for advice about what financial options are best for them.