Financial Planners Can Guide Seniors to Easy Funding Options

Megan Ray  |  April 30, 2014

Once people reach a certain age, they may start to consider moving into a senior living community for a variety of reasons. That being said, before individuals can make a move and enter one of these residences, they have to square away how they will cover the associated costs on a fixed income. Fortunately, as a financial planner, you can help them sort out their personal assets, in addition to providing your expert guidance when it comes to exploring other funding options from outside resources. By collaborating with individuals and pinpointing all the possibilities in terms of financing their senior care, you could ultimately lay the groundwork that will allow them to make a smooth, stress-free transition to a comfortable community.

Evaluate their personal finances
First and foremost, you will want to draw up a budget for each client you encounter, so you can determine which senior living options would be right for him or her. To accomplish this, you should first assess seniors' assets to see what they could afford on their own. The Assisted Living Federation of America explained that when trying to free up personal funds, you need to set your sights on one of the most valuable possessions that people have to their names: their home.

If seniors no longer require their house and are joining a living community indefinitely, they can consider selling the property outright. When that option seems too extreme, individuals could always rent out their homes, taking the money generated through rent to pay for their senior care. People may also want to think about going with a reverse annuity mortgage. However, this option is normally viewed as a last resort for individuals who know they will be tied into paying for their residential communities for fewer than five years. Additionally, reverse mortgages are not widely known nor are they easy to understand, so make sure you're ready to explain these in depth to help seniors better understand exactly what they're getting into.

After taking care of the house, you can examine the other funds that seniors may have in their bank accounts or estates. Once you have a precise figure for your client's financial value, you can formulate a base budget for senior care expenses. With that starting point in mind, you can begin searching for financial assistance for which certain people are eligible so that you can expand the funds available and ensure they move into these communities without being burdened.

Assess alternative resources
According to ALFA, Medicare - both Parts A and B - will only get seniors so far in terms of their personal well-being. These benefits are limited when it comes to community living, setting time restrictions, as well as parameters on the type of care covered. Medicaid is a stronger possibility, but even the funds available through these programs vary greatly. You will want to research if people are eligible and for how much coverage they qualify to get a clear picture of the potential financial support these options could offer. Not to mention, they should be careful not to rely too heavily on these benefits, in the event that these programs start to scale back their funding.

The government does offer other benefits to mitigate extensive senior care costs. For example, the Internal Revenue Service allows deductions for a share of expenses associated with elder services. At the same time, if people are veterans or the spouses of veterans, they are eligible for monetary support to pay for some of their assisted living or medical care.