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How to Finance the Cost of Senior Living

Headshot of an older man smilingWhen it becomes apparent your aging father needs the additional care and support of a senior life community, one of your first questions likely will be, “How will we pay for this?”

Whether you’re looking at how to pay for independent living or assisted living, renting an apartment, or securing a townhome, your parent can expect to spend an amount comparable to or greater than his current spending level—and that makes it important to identify all the financing options that may be at your disposal.


Retirement Financing Options

Here are 11 retirement financing options worth considering:

Retirement Benefits

Pension. If your dad was a government employee or member of a union, he may receive a pension. It likely won’t cover the entire cost of senior living care, but it can supplement his available funds.

Veteran’s benefits. Wartime veterans or their surviving spouses may qualify for an Aid and Attendance pension, which can help pay for home care or assisted living costs. Learn more about the requirements here.

Learn about additional benefits your parent may be eligible for at benefits.gov and benefitscheckup.org.

Health Benefits

Medicare. Many people are surprised to discover that Medicare doesn’t cover senior living or long-term (custodial) care. It will, however, finance short-term skilled nursing care (20 to 100 days) which can help preserve your father’s funds for other expenses.

Medicaid. Medicaid is an option if your father requires nursing care at home, in a nursing facility, or in an assisted living setting. Your parent will need to meet income and health requirements to qualify for coverage. Eligibility requirements vary from state to state, so it’s best to get in touch with his local office.   

Health insurance. Similar to Medicare, private health insurance will cover the costs of medical treatment so your parent won’t have to pay for all of those expenses out of pocket. It does not cover senior living costs or custodial care.


Bridge loans. A bridge loan is a short-term (typically up to a year) loan backed by some sort of collateral, such as real estate; it provides an essential cash-flow source. If your parent needs to move quickly but still has the family home, a bridge loan can pay some or all of his expenses during the transition.

Long-term care insurance. If your father carries long-term care insurance, it may finance his care as long as he can perform some daily tasks. This could allow him to preserve more of his assets.

Life insurance. Your father might be able to borrow against a life insurance policy or sell it to a life settlement company to supplement his available funds. If you do decide to sell the policy, however, consider these pros and cons.

Other Resources

Sale of house. Selling the family home is one of the most common ways to pay for senior living costs. By “trading” one housing cost for another, your father’s budget and savings could remain relatively intact.

Family contributions. If you have siblings, now might be the time to discuss what, if any, is a reasonable contribution you each could make to your elderly parent’s care. Try to have an open, non-judgmental conversation during which you value contributions of time, emotional support, and money as equal resources.

Lifestyle considerations. With plenty of choices available in senior housing, your parent may opt to find a simpler residential solution. Renting in a senior living community is an affordable option that could help keep his nest egg intact.

Talk with your financial planner or an elder law attorney to identify all retirement financing options that could work for your parent and your family.

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