Alternative Ways Seniors Are Paying for Long-Term Care
Longer life expectancies and higher healthcare costs are forcing seniors to pay more for long-term care — health aids average more than $20 an hour, and facilities range from $119 to $225 per day depending on the level of care. With such high expenses, many seniors are seeking out alternative ways to pay for the long-term care they need later in life. Here are a few of the more creative solutions some seniors are using.
Gig Working When Physically Able
Most seniors aren’t able to work once they require significant long-term care, but many can work before they reach this stage. Gig work can be especially well-suited for seniors.
Gig work gives seniors the flexibility to work around their schedules, and even how they’re feeling from day to day. A wealth of opportunities, ranging from grocery store shopping to consulting, provide plenty of options for seniors with different skillsets. The main downside to this type of work is the lack of employer-provided health insurance, but that’s not a major concern if you qualify for Medicare.
Withdrawing From Tax-Free Accounts Last
Seniors who have nest eggs generally should withdraw from their tax-free retirement accounts last (barring required minimum distributions). This allows the accounts to grow as much as possible without paying additional tax on that growth. Even a few years’ growth may be enough to substantially cover the cost of long-term care for a period.
Moving to Smaller Homes
The home is the biggest source of retirement funds for most seniors, and many have to tap this source before they require long-term care at a facility. Moving to a smaller home allows seniors to access some of their equity so long as they can still live in their own residence. That equity can be used to pay for anything, including in-home assistance or medical care.
Refinancing With a Reverse Mortgage
A reverse mortgage is yet another way that seniors can access equity in their home. Seniors receive either a lump-sum or monthly payment for their house, and the investor takes possession of their home upon death. The investor can then sell the home. A reverse mortgage often isn’t as advantageous as downsizing or selling to a child. When those aren’t feasible options, however, this can be a good solution.
Selling the House to Children
Some seniors sell their house to their children, and then pay their children monthly rent. This allows seniors to access the equity in their house. Meanwhile, children get a boost to their monthly cash flow. The situation requires a lot of trust, but it can be an excellent arrangement when there is substantial trust.
Cashing Out Their Life Insurance
For seniors who have life insurance, their life policy is a financial resource that traditionally can’t be accessed until seniors no longer need it. Life settlements grant seniors funds that they can use while still alive, though.
In a life settlement, a senior’s life policy is purchased by an investor. The senior usually receives a lump-sum payment with no restrictions on the fund. The investor receives the policy’s benefits upon death — which sometimes makes no difference to a senior. See what your life insurance policy is worth using our free, instant life settlement calculator.
To learn more about how a life settlement might allow you to access more funds for long-term care, contact Q Capital at 866-679-9410 or email us info@qcapital.com to discuss your situation. Our team is available and ready to explain to you all that you need to know about life settlements.
Remember: Never abandon a life insurance policy without looking at the life settlement option first!
