Moving into an assisted living community is a big decision. At Bethesda Gardens in Phoenix, Arizona, our staff makes it a point to communicate often with family and new residents and ensure that individuals settle happily in their new home. But we also know that making the choice to migrate to assisted living means you have to deal with a lot of details.
One of those details might be what to do with your existing home if you own it. It's definitely a personal decision and every situation is unique, but we've put together a brief guide to some of the common options for you to consider.
One of the most common scenarios involves seniors selling their homes and using the money to add to their retirement funds. If you already own the property outright, you might be able to convert it into a decent amount of cash, paying for several years or more of assisted living. You could also invest the money in something such as a lifetime annuity to help ensure income for the rest of your life.
Working with such a large sum of money can come with both positive and negative consequences, especially when it comes to taxes. So, make sure you consult investment or tax professionals to understand the best way to handle the proceeds from a home sale.
If you still have a mortgage on your home, you might need to sell it to reduce your monthly expenses. Paying for a mortgage and monthly assisted living expenses might get a bit overwhelming.
In some cases, one spouse is ready to move into an assisted living community while the other spouse would prefer to remain at home. In this case, a reverse mortgage might be an option. Reverse mortgages let you convert the equity in your home to regular income payments. You don't have to pay them back until you both move out, you sell the home or both homeowners pass away. In the meantime, the income from the reverse mortgage might be used to help cover assisted living costs.
As with investments, reverse mortgages can be complex. Work with a broker you trust and seek out financial and tax advice before you make a decision.
If you have trusted friends or family who can manage the property, you might be able to keep it as a rental. This does take a bit of time and money, and you might want to offer to pay someone to manage the property. But renting the home offers two major benefits.
First, the home continues to make money for you. That money can be used to fund your retirement or be set aside in savings for a rainy day. It's important to note that rental properties aren't 100% guaranteed to make you money. Whoever is managing the property, for example, must be sure to find good tenants, and there may be maintenance and repair expenses.
The second major benefit of renting your home is that you keep it. If for any reason you decide you want to move back, it will still be there.
If you don't need rental income, you could let family move in for free and keep up the home in your absence. That way, you can return to visit the home you love from time to time. This might also be a good way to ensure that the home stays in the family, as whoever cares for it during your retirement might be able to inherit it and carry on living in it.
In other cases, family homes might be used for other functional purposes. If you don't have to sell or rent it to help pay for assisted living, you could simply keep it and allow it to be used for family gatherings. People could stay in it for holidays and you could even go along too and visit with everyone. Other uses for homes can include office or functional space for charities or events.
As you can see, there are many options to choose from. It's important to ensure you understand the ramifications of each, though. Consider talking with a long-term care planning professional so you can understand whether keeping or selling your house would be the best move at a certain time. For example, if you're going to rely on Medicare and Medicaid to help cover any of your long-term care expenses in the future, keeping your house might mean that you give it up later to cover medical costs. Educating yourself as early as possible helps you make the most positive decisions for your financial future as you contemplate a move to assisted living.