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How
to Afford Senior Housing... Know Before You Go!
By: Randalynn Kaye
 In my 10 years as
a senior specialist , the two questions I run into most when I’m
helping people research housing are, "How much does it cost?" and,
"Can I afford it?" The best way to find the answer to those two
questions is my simple golden rule: "Know Before You Go."
If you go shopping for a car, you need to know if you can shop at the
Ford dealership, the Cadillac dealership or look for a good deal on a
second hand vehicle. And it’s the same with senior housing.
There’s a wide range of housing and lifestyle options for all budgets,
and you absolutely must know how much money your parents have to work
with BEFORE you start looking at specific options. What you want to
avoid is showing your parents options they fall in love with, only to
find out afterwards that they are not financially viable.
To get you started, I’m going to tell you about two specific numbers
that are critical points for the marketing professionals you’ll be
speaking with, so having them handy will speed up the process and
allow you to get more specific information from them.
The information you’ll need will fall into two categories: Assets and
Income. With Assets, the number you’re looking for is your parents’
total Net Worth, also referred to as Total Combined Capital Assets.
This is the total combined value of all the assets they own, such as
Cash, Saving Accounts, Checking Accounts, Money Market Accounts,
Certificates of Deposit, Stocks & Bonds, IRAs, Annuities, Real Estate,
Cash value of insurance policies.
What you should NOT include are things like the car, china and
crystal, furniture, etc. These are considered commodities and don’t
factor into the official financial picture. A good rule of thumb is to
not include anything they use for daily living, the primary exception
being their current home.
Also, it’s not important that each of these areas is specifically
broken out. The people you will be dealing with are looking for one,
bottom-line number. If a portfolio already exists simply get the value
of the portfolio. You simply need to know the total asset base you
have to work with.
When calculating Income it is important to focus on AVAILABLE income.
The actual term used by senior housing professionals is "Total
Available Monthly Income." So when doing your calculations, count ALL
income, regardless of whether the person is using it now or letting
interest and dividends roll into the principal.
The most common sources of income are Social Security and Pensions.
Often older adults will live very comfortably on their pension and
social security and consider that to be their ONLY income. But to be
accurate in your research process, you have to dig deeper and look at
the entire picture, adding ALL income into one pot. Other sources may
include: Interest and Dividends earned from assets, IRA Income and
Rental Income.
When you have tallied all of the annual income from these sources, add
it all up and divide by 12. This number is the Total Available Monthly
Income. It doesn’t mean they have to spend it or take the payout on
it. It just has to exist. What you want to know is how much money is
available each month without starting to spend down the asset base.
Whether you are considering purchasing traditional real estate or
moving to a retirement community, know before you go! Do this homework
in advance and you’ll save yourself stress, emotional anxiety and
valuable time in your research process.
About the Author:
This article was
submitted by Randalynn Kaye, author of Senior Housing 101 and founder
of Elder-Transitions. For more information or to contact Randalynn,
visit
www.Elder-Transitions.com.
Article Source:
http://www.ArticleBiz.com
Additional Information and
webpage by Paul Susic MA Licensed
Psychologist Ph.D. Candidate
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