Solutions to pay for senior care and living expenses.
Improved medical care has allowed many Americans to live longer than ever before. The Centers for Disease Control and Prevention reports the 2015 average U.S. life expectancy at 78.8 years, up from 68 years in 1950.
That longevity comes with a cost. Because older adults live longer than expected, many of them live beyond their retirement savings. As a relative or caregiver, what can you do?
You wish you could pay your loved one’s bills, but you have a mortgage, kids heading to college and your own retirement savings to think about. You can't do it all, but you can help your loved one find a solution. Here are a few options:
Research social services.
More than 400 programs nationwide provide financial elder care assistance according to the American Elder Care Research Organization. Its Resource Locator Tool will put you in touch with federal, state and local government support services, as well as non-profits and other agencies.
Consider a Senior Care Bridge Loan.
Offered by Elderlife Financial, the Elderlife Bridge Loan helps seniors and families with the cost of assisted living, home care or skilled nursing. It may also provide cash to the family to help pay relocation costs and certain unexpected expenses. The loan allows multiple co-borrowers, such as the children of an aging parent, to share the cost of care.
Take out a reverse mortgage.
If your loved one still lives in her home, a reverse mortgage allows her to tap into home equity to supplement any retirement income. It’s available exclusively to homeowners and homebuyers age 62 and older and provides funds as a line of credit, as monthly income or as a lump sum. Your loved one won’t make any loan payments as long as she stays in her home. The homeowner usually pays upfront fees, which can be rolled into the loan.
Apply for Medicaid.
Medicaid provides medical care and support services for low-income seniors and disabled individuals. Eligibility requirements vary by state, but an older adult must usually show no more than $2,000 in assets. Contact a Medicaid planner, your state's ombudsman or your local Area Agency on Aging for help navigating this complex system.
To avoid an emergency situation, help your parents get a plan in place while they still have resources. Here are a few ways to free up more cash:
Nix credit card debt.
Make an aggressive plan to eliminate credit card debt. “No one over age 62 should have one dollar in credit card debt,” says Diana Rogers, a reverse mortgage specialist with Finance of America Reverse. “The interest will eat their savings fast.”
Review their budget.
With so many competitive offers on the market, you may be able to help your loved one cut telephone, cable and Internet costs by switching providers or choosing a different package.
Meet with a financial planner.
A financial planner can help your loved one determine how to best allocate 401(K) investments, reduce debt and otherwise organize finances.
Of course, you want to do everything you can to help a parent in financial crisis. Understand the options so you can point your loved one to a solution that will ease their worries and keep them comfortable for years to come.