Most people use personal savings to pay for their home in an independent living community, but there are other ways to cover the safety, security, and amenities and services that this senior living option provides. Additional payment sources commonly used to cover the $3,145 median monthly cost of independent living include income from a part-time job, retirement accounts, income from the rent or sale of a home, and benefits such as Social Security retirement and military and veterans pensions. For people who have low incomes, public programs such as housing assistance and Supplemental Security Income (SSI) can help.
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Most people use money they’ve saved to pay for independent living, including retirement accounts, pensions, and investments. Many people also use Social Security retirement benefits and income from part-time jobs.
“Because independent living communities don’t provide medical services, residents do need to use personal funds rather than long-term care insurance or VA health benefits, for example,” says Beth Wilkison, a learning and development manager at A Place for Mom, who has three decades of experience working with families in memory care and other senior living communities.
“But these communities provide a lot of other things, such as safety, security, lawn care and snow removal, and activities. Someone who’s living in their own home would have to pay extra for all these things,” Wilkison explains.
Eligible veterans can use military retirement pay, a VA pension, or VA disability compensation to pay for independent living, since the spending of these funds is at the discretion of the veteran.
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Life insurance policies can serve as a cash reserve for people looking for ways to pay for independent living. Policyholders can explore many different options, such as:
If you use life insurance to pay for independent living costs, it’s vital to consult your insurance company to understand specific regulations and details.
For most people, their home is their most valuable asset. So, many families opt to sell, rent, or take out a reverse mortgage on their home to free up funds for senior living.
Reach out to a real estate agent to discuss selling your home to pay for independent living. Senior real estate specialists — agents who have experience working with older adults, in particular — can be trustworthy and knowledgeable partners in this process. You can find a Senior Real Estate Specialist (SRES) in your area through the National Association of Realtors’ database.
“Lots of people sell their home to fund their transition to independent living,” Wilkison explains.
Though it’s a less traditional option, renting out the family home has become an increasingly popular strategy. Often, this can be more lucrative from a long-term perspective. It can also be surprisingly stress-free: Investment and property management companies work with you to take on tasks such as finding tenants, determining rent prices, and managing the property.
“Renting your home to pay for independent living is a good option if you need to move quickly, if it’s not a seller’s market, or if the home needs some work,” says Wilkison.
Reverse mortgages are another way to access the value of your home. A reverse mortgage is a loan borrowed from your home’s equity. Home equity is determined by calculating the difference between the appraised value of your home and what you owe on the mortgage.[01]
Many couples who move into an independent living community sell their second car and share one vehicle, which also lowers the cost of insurance, taxes, gas, repairs, and parking. Other possessions that people commonly sell when they move to independent living include:
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Most public benefit programs are intended to be used for health care services. Since these services aren’t provided in independent living communities, money from those programs can’t be used to pay for independent living. However, some public benefits can help offset the cost of rent in independent living communities, such as:
People typically choose independent living when they’re active and healthy and desire a more social, maintenance-free lifestyle. New friendships, less stress, and special amenities are among the benefits older adults seek in independent living.
Yet, as you continue to age and require more care, you may find that independent living no longer meets your needs. As you assess how to pay for senior living, you can be proactive by planning for what comes next, including understanding payment options for assisted living and payment help for memory care.
No, health insurance will not cover independent living costs since it doesn’t provide health care services like assistance with ADLs or dementia care.
No, Medicaid will not pay for independent living. Medicaid only covers health care costs and independent living communities are not health care providers. If you come to need care, some communities may allow you to receive care onsite. Medicaid may cover some of those costs.
No, long-term care insurance will not pay for independent living since they are not long-term care facilities. If you come to need care, some communities may allow you to receive care onsite. Medicaid may cover some of those costs.
No, Medicare will not pay for independent living because Medicare is a federal health insurance program and these communities do not provide health care services. If you come to need care, some communities may allow you to receive care onsite. Medicaid may cover some of those costs.
Not directly, but veterans can use their retirement, VA pension, or VA disability funds to help offset their rent at an independent living community. If you come to need care, some communities may allow you to receive care onsite. Medicaid may cover some of those costs.
Consumer Financial Protection Bureau. (2024, September 11). When do I have to pay back a reverse mortgage loan?
U.S. Department of Housing and Urban Development. Housing choice voucher program: Section 8.
Social Security Administration. Understanding supplemental security income SSI eligibility requirements — 2024 edition.
The information contained on this page is for informational purposes only and is not intended to constitute medical, legal or financial advice or create a professional relationship between A Place for Mom and the reader. Always seek the advice of your health care provider, attorney or financial advisor with respect to any particular matter, and do not act or refrain from acting on the basis of anything you have read on this site. Links to third-party websites are only for the convenience of the reader; A Place for Mom does not endorse the contents of the third-party sites.
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