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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 Iím 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 itís the same with senior housing.

Thereís 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, Iím going to tell you about two specific numbers that are critical points for the marketing professionals youíll be speaking with, so having them handy will speed up the process and allow you to get more specific information from them.

The information youíll need will fall into two categories: Assets and Income. With Assets, the number youíre looking for is your parentsí 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 donít 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, itís 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 doesnít 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 youíll 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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