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Financing Your Senior Years: Planning Considerations

Written by Teresa Te on September 20, 2017

What’s waiting for you post-retirement? With Americans living longer than ever before, more than 50% will need nursing home care – and that can come at a pretty penny. Individuals and their families need to plan extensively in order to make those final years of life both comfortable and economically tenable.

There are numerous different ways to approach living arrangements for our loved ones or ourselves as we age, but we need to start thinking about it now. Here are some factors to weigh as you assess where you’ll live and who will care for you.

Income Level

Nursing home care is expensive, estimated at $90,000 a year as of 2009, but it’s also subject to an interesting catch-22: if you have very little money, you may be better positioned to find and keep a nursing home bed than if you have moderate funds at your disposal. That’s because Americans with minimal income can often pay for their nursing home bed through a combination of Medicare and Medicaid benefits.

While all senior Americans qualify for Medicare, Medicaid is need-based, so you have to have a low enough income to qualify. If you know in advance, however, that you’re going to need nursing home care – for example, you have a preexisting health condition or no children who are able to help with your care – you might choose to reduce your income to qualify for Medicaid.

Though scaling back your work pre-retirement and living on a limited income may seem undesirable, you can protect your savings during this time so as not to compromise your standard of living too much. The key is advance planning. If you don’t take the long view, you won’t be able to make this arrangement work.

Service Availability

In recent years, reporters have covered countless cases of nursing home neglect and abuse. This weighs heavily on seniors and their families who are trying to make decisions about future living situations. Especially vulnerable people, like those with limited mobility or cognitive deficiencies, are more likely to be subjects of abuse; so if local nursing homes are poorly reviewed or the subjects of recent scandals, many families opt to avoid them.

Faced with a lack of residential options, some families turn to care managers to assess alternatives. Some elderly individuals thrive by employing skilled nursing care, also paid for through Medicare and Medicaid, as it allows them to remain at home. Others opt to live in an assisted living facility for as long as possible to enjoy the social benefits and oversight offered there in the event that they don’t need significant medical assistance or treatment.

Families should work together to come up with a responsible, mutually agreed upon solution for their senior members – and they should start talking about it sooner rather than later. Prudent advance financial decisions can be the difference between enjoying safe and comfortable final years and spending that time constantly dodging hazards and blockages in the skilled care system.