The traditional dream of retirement is being able to sit back with a multi-million-dollar retirement account that enables you to live off the interest. No worries, just the frustration of not getting your tee time. However, in today's socio-economic culture, paying for your retirement housing may include paying fees for services as well as for rent and household expenses. If health becomes an issue, those golden years can become a huge financial burden with long-term care eating away at all the savings you've slowly invested over the decades.

The funding necessary to house those in need of long-term care will become a growing, expensive problem for our society as the baby boomers become older and in need of such housing facilities. When you compare the cost of long-term care to the amount of money most retirees have stored away, one begins to understand the enormity of the problem.

Long-term care is paid for through either personal funds, long-term care insurance or Medicaid (for those at or below the poverty line). For elderly residents not fortunate enough to have large sums of money to use for long-term care, there are financial resources available for assisted living expenses.

The possible payment options, other than existing private funds, for long-term care are:

  • Medicare
  • Medigap (private Medicare-supplemental insurance)
  • Medicaid
  • Supplemental Security Income (SSI)
  • Social Security benefits
  • Long-term-care insurance
  • Reverse mortgage (home-equity conversion)

According to Assisted Living Federation of America's Web page on paying for long-term care, "Approximately nine out of 10 residents in an assisted living facility are private pay; that is, they pay out of pocket for their own care. For the rest, costs are paid by Medicaid (MediCal in California) and supplemental security income (SSI), with Medicaid paying for the health care and SSI paying for room and board."

On the low end, an assisted living residence could cost as little as a regular apartment rental -- between $620 to $995 per month, according to the U.S. Department of Health and Human Services. On the high end (and there's always a high end), it ranges from $1,639 to $3,565. If you or someone you love is facing assisted living choices, the cost for this type of housing will run roughly $1,000 a month -- probably more -- in most areas of the country. Long-term care is a lot less than nursing home care, however, which carries a national average of about $4,000 per month.

There's a popular model for assisted living that's popped up over the last decade and its one that my neighbors opted for about a year ago. They owned their house outright, sold it and handed the proceeds over to a continuing care retirement community. They paid a huge lump sum -- about $300,000 -- right in the beginning and then pay a small monthly fee for various services. Now in their late 70's, they were willing to trade their four-bedroom, three-bath home for a two-bedroom apartment that comes with all the accoutrements of a fine hotel.

Instead of their equity sitting in their home, a corporation now holds it for expenses and operation of the facility that includes a gated, self-contained community, complete with restaurants, clubs, hair salon, gift shops, game rooms, swimming pool, sauna -- and the list goes on. The facility also includes a nursing home division so that one can move from independent to assisted living to 24/7 care if necessary.

Part of this arrangement, of course, includes dealing with your own mortality. Once the resident passes away, the large deposit is returned (less expenses) to the surviving heirs.

Long-term care is an eventual area of the housing spectrum we all must consider at some point in our lives. Considering it and weighing options long before it's absolutely necessary can help alleviate the stress of making that final move.

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