The #1 question people have about senior living is about how much it costs. We tackled the cost question (with the latest cost figures available) in this article.

But another common question is “How Do I Pay For Senior Living?” The good news is there is no shortage of options.

Some of the options for paying the costs of senior living, like paying out of pocket, are pretty obvious. However, there are a bunch of options that aren’t so obvious. And one of them may be just the option you’re looking for to help cover the costs of senior living.

Either way, we’ve put together a comprehensive list to help you understand your options for paying senior living costs. Here are 20 ways to pay…

1. Out of Pocket/Private Funds

This is the most common option for people. They may use money they’ve saved up in bank accounts. Or they may cash in stocks, mutual funds, retirement accounts (401Ks and IRAs) or other investments.

The challenge with this option is that eventually, for many, the funds will run out. So it is often not an option that you can tap into forever. That said, when funds do run low, you can apply for Medicaid to help pick up the costs.

2. Sell/Rent Your Home

For many people, their home is usually their most valuable asset. So, if you or your loved one is going to move out of the home and into senior living, selling the home can provide funds to cover the costs of senior living.

Selling a home that’s been in the family can be a tough choice though. If you’re not ready to take this step, consider renting. That way, you can keep the home while it produces some income that can be used to pay for senior living costs.

3. Veteran’s Benefits

Veterans and their surviving spouses may qualify for benefits through The Department of Veteran’s Affairs. The VA has an Aid and Attendance benefit that provides money to cover the monthly costs of senior housing and care. There are requirements that must be met to qualify, however. One is that you must have less than $80,000 in assets.

If you meet the requirements, however, this can be a great option. You can find out more about it on the VA website here.

4. Medicaid

Medicaid is another common option seniors use to cover senior living costs. It is a federal government program that is administered by the individual states. Because of this the rules of who qualifies, what is covered and how much it pays for vary greatly from state to state.

One thing that is consistent with Medicaid is that it’s for those with limited financial resources. It also generally doesn’t cover all the costs associated with senior living. If you or your loved one have limited means, look into the Medicaid requirements in your state. (

5. Medicare

Yet another government plan, Medicare is not needs-based like Medicaid. It is meant for those who are over 65 as well as those who have certain disabilities regardless of their finances.

Depending on the type of Medicare plan you have (which are paid out of pocket), long term care options may be included. You’ll have to look at the details of the Medicare plan you have to see what is covered and what isn’t.

6. Senior Living Line of Credit

This is a loan that a senior and/or their family take out. Typically this is used while waiting to sell a home or while waiting for long term care insurance or VA benefits to kick in. Like any loan, it is subject to approval.

These lines of credit allow seniors and their families to borrow what they need each month to cover senior living costs.

7. Long Term Care Insurance

For those who took out long term care insurance, assisted living should be covered as part of that policy. Exactly what is covered and how much depends on your exact policy.

Long term care insurance policies are usually taken out by those with significant assets as a way to protect those assets. These policies may be offered through your employer, through private insurance companies or other organizations.

The costs of the policies depend on your age at the time you buy the policy, the amount of the benefit, the benefit time period, the deductible and some other factors.

8. Supplemental Security Income (SSI)

SSI is another helpful government program that can be used to cover a portion of senior living costs and care. It’s run by the Social Security Administration but is different from Social Security payments.

SSI is a monthly cash payment. To be eligible, one needs to be 65 or older and demonstrate financial needs. Usually this means having very little, if any, income and total assets of a few thousand dollars or less. It is a federal program though some states will chip in some money on top of what the fed provides.

9. Life Insurance/ Life Settlements/Life Assurance

These options come into play for those who have a life insurance policy.

Some insurance companies have an option where you can cash out your policy or take advantage of accelerated or living benefits. This is when the company will buy back your policy. Usually this will be for between 50% and 75% of its value.

You can also sell your policy to a 3rd party. This is known as a life settlement (also a senior settlement). Again, you can expect to receive 50% to 75% of the policy’s value.

Lastly there’s life assurance. This is when you switch your life insurance policy’s benefit to long term care. In making this switch, you’ll typically get between 15% and 50% of the policy’s value.

10. Reverse Mortgage

Reverse mortgages are an option for those 62 or older that have equity built up in their home. In that situation, you can borrow money from a lender against the value of your home. That money may be taken as monthly payments, as a lump sum or as a line of credit.

This could be a good option if much of your net worth is tied up in your home and you don’t plan on keeping the home in the family after you or your loved one passes. However, these loans can be expensive and complicated so be sure to do your research and protect yourself before taking out a reverse mortgage.

11. Bridge Loan

Bridge loans are short term loans. If you’re having trouble selling your home and need money to pay for senior living costs, they may be a good short term option.

12. Annuity

Annuities are for those with a good sized savings account. And they can be complex. So best to consult with a financial advisor or accountant before jumping into one.

Basically here’s how they work: You buy an annuity with a lump sum up front. Then you’ll get monthly payments from the annuity for a set period of time (which can be the rest of your life). So an annuity basically insures you’ll have some money coming in each month. And they are investments so you can potentially get back more than you put in. But it is a risky investment.

One other nice thing about annuities is that it will not be fully considered an asset by Medicaid if you apply for that. The original lump sum you paid to purchase the annuity won’t be considered an asset by Medicaid. However, the monthly payments will be.

13. Cost cutting/budgeting

This option, and many of the remaining ones, are mainly for those who are paying for an elderly parent. Also, they are considered short term solutions.

The first one is cost cutting and/or budgeting. Basically, how can you cut back on expenses? Fewer dinners out? Fewer trips to Starbucks? Do you really need Netflix and Hulu? See what can be cut back on, if not eliminated, in the short term to help cover senior living costs for Mom or Dad.

14. 2nd job or OT

Is it possible to work longer hours at your current job? Can you take on a second one? Even working a modest number of extra hours each week can help ease the burden of senior living costs.

15. Going into debt (Credit Cards)

This is not an ideal option. However, if all else fails, you could go into debt by putting senior living costs on a credit card. Credit cards aren’t the only debt option. Home equity loans or personal loans are other ways to use debt to pay for senior living.

16. Make Short-Term Living Arrangements

Maybe hiring a home health aide to help provide care would work in the short term. And that may be cheaper than senior living. Or, if your parent(s) can’t stay in their home, perhaps they could move in with you or another relative for a while until other funds for senior living become available.

17. Put a Freeze on Contributions to College Savings and/or Retirement Accounts

Are you funding an IRA? Do you have money being diverted to a 401K at work? Are you contributing to a college savings account for your child(ren)? It’s usually difficult to pull money out of accounts like this for senior living expenses (and, if you do, there will likely be some penalties involved). However, you may be able to stop contributing to these accounts for a little while. Again, it’s not an ideal option but could free up much needed funds to cover senior living costs.

18. Caregiver tax credit

You can possibly get a tax credit if your parent is a dependent. They can be considered a dependent if you account for more than half of their support. Tax rules are constantly changing so be sure to check with an accountant to see if a caregiver tax credit is an option for you.

19. Support From Family

This can be a tricky one, depending on your family. But if you have siblings, cousins, etc. of means, then they might be willing to pitch in to help cover some senior living costs.

20. GoFundMe

More people are turning to the kindness and generosity of strangers to help cover costs for health care and senior living. We’ve seen GoFundMe campaigns for seniors where people have donated anywhere from $100 to over $25,000 to help someone pay for senior living. We wouldn’t count on this option but it may be worth a shot if needed.

The Bottom Line of Paying For Senior Living

Figuring out how to pay for senior living can be a confusing, stressful thing. Hopefully you got some good ideas from the list above. We also highly recommend finding a good elder care attorney or accountant who specializes in senior living issues. Yes, it may cost some money to get their advice/services. But the help and advice you get from good ones may be worth its weight in gold.

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