How to Pay for Independent Living

The first step in affording independent living is fully anticipating its costs. The median cost of independent living rings in at $3,000 per month, according to A Place for Mom’s 2023 report on the cost of long-term care.^[01] However, this range can vary widely based on a community’s location, size, and amenities. As with other senior care types, independent living costs peak in major metropolitan areas.

Seniors can better understand whether a community fits their budget by asking some key questions:

• Are the community’s rent costs all-inclusive? Do residents have to pay extra for meals, independent living activities, and amenities such as fitness classes and beauty salon or barbershop services?
• Does the community have move-in specials? (Some facilities offer discounts based on what month a senior moves in or their lease length.)
• Does the community offer differently priced floor plans?
• Is it possible to cut down on rent costs by living with a roommate?
• Are there any one-time costs seniors should prepare for, such as a community move-in fee? Are these costs refundable if a resident leaves the community for any reason?

Additionally, seniors can consider what expenses independent living can remove from their budget. While their rent costs may rise, all-inclusive independent living may reduce or fully eliminate spending on food, transportation, housekeeping services, and more.

When it comes to paying for senior independent living, most people have to turn to their personal savings. This can include pensions, retirement accounts, and investments. If personal income or savings are spent on medical care services within an independent senior living facility, a senior may qualify for tax cuts related to these medical expenses.

If seniors have a source of income, such as Social Security payments or paychecks from a part-time job, they can put this money toward their rent in an independent living community as well.

Let our care assessment guide you

Many seniors have invested in insurance policies to be proactive about the costs of long-term care and senior living. But does insurance cover independent living costs?

Independent living and long-term care insurance

Long-term care insurance — also called senior care insurance — differs based on a senior’s specific policy and what company provides it. In most cases, however, these policies help with health and personal care costs, making them more applicable to assisted living, memory care, and skilled nursing facilities than independent living.

Generally, seniors can use their long-term care benefits when they require help with two or more activities of daily living (ADLs) — such as bathing, toileting, or getting dressed — or when a doctor has determined they’re experiencing cognitive impairment.

Since independent living doesn’t incorporate help with ADLs or dementia care, long-term care insurance typically doesn’t cover costs associated with independent living.

Independent living and life insurance

Seniors often buy life insurance to continue providing for their families financially after passing away. But in cases where older adults need to free up money for senior living, life insurance policies can serve as a reliable and substantial cash reserve.

Policyholders can explore many different options, such as the following:

• Selling the policy
• Surrendering the policy in exchange for its cash value
• Taking out a loan, then paying the money back into their life insurance fund
• Setting up a living benefit program, which allows seniors to use some life insurance funds while preserving the remainder for family members

If you use life insurance to pay for independent living, it’s vital to consult your insurance company to understand specific regulations and details.

Older adults moving into an independent living community often sell their home to fund the transition. Seniors and their families should reach out to a real estate agent to discuss selling a home to pay for senior living. Notably, senior real estate specialists — agents who have experience working with older adults, in particular — can prove to be a trustworthy and knowledgeable partner in this process. Seniors and caregivers can find a Senior Real Estate Specialist (SRES) in their area through the National Association of Realtors’ database.

Though it’s a less traditional option, retaining one’s house and using this family home as an investment — as in renting it out to another individual or family — has become an increasingly popular strategy. Oftentimes, this can be more lucrative from a long-term perspective. It can also be surprisingly stress-free: Investment and property management companies work with older adults to take on tasks like finding tenants, determining rent prices, and managing the property.

A house stands out as a majority of seniors’ most significant asset, but selling other items helps generate value, as well. For example, a couple moving into independent living may consider sharing a vehicle and selling their second car.

Talk with a Senior Living Advisor

Many public benefit programs only help seniors cover medical care costs, which independent living doesn’t encompass. The following government programs don’t typically pay for independent living, but they might cover medical care costs within a senior living facility:

• Medicaid and Medicare. These programs serve as federal and state health insurance programs for vulnerable populations, like older adults and low-income citizens, who would otherwise be unable to afford necessary care. Independent living doesn’t fall under the range of covered health care services.^[02]
• VA benefits. These programs, like the Aid and Attendance and Housebound benefits, typically stipulate that a veteran must require help with ADLs, a service independent living doesn’t provide.However, eligible veterans may use military retirement pay, a VA pension, or VA disability compensation to pay for independent living, since the spending of these funds are at the discretion of the veteran.^[03] Veterans and eligible spouses may also be able to purchase a VA-approved independent living condo with a no-down-payment VA home loan, but the process to do so can be complicated and lengthy.^[04]

In some cases, seniors in independent living may coordinate care through a third-party home health agency. Medicaid, Medicare, and VA benefits typically cover these services when they’re prescribed by a doctor.

Though rare, some public benefits may help seniors manage independent living costs. In many situations, the following public benefits do help pay for independent living:

• Housing assistance. The U.S. Department of Housing and Urban Development (HUD) offers housing vouchers to very low-income seniors under Section 202. Seniors are not expected to repay these vouchers.It’s important to note that not all independent living communities accept Section 202 vouchers as payment.^[05] Income requirements vary based on a senior’s area of residence, so seniors interested in receiving vouchers should contact their local HUD office.
• Supplemental Security Income (SSI). Also intended for very-low-income seniors, SSI payments provide an additional stipend for eligible older adults already receiving Social Security benefits. Generally, a single senior’s estimated net worth must be less than $2,000 or $3,000 for a senior couple.^[06]Interested seniors should begin the application process by calling Social Security representatives at 800-772-1213 or by visiting their local Social Security office.

Seniors typically choose independent living facilities when they’re active and healthy and desire a more social, maintenance-free lifestyle. This empowers older adults to form new friendships, indulge in amenities, and enjoy their retirement with less stress.

Yet as they continue to age and require more care, seniors may find that independent living no longer meets their needs. As they assess how to pay for senior living, seniors can be proactive by also planning for what comes next, including payment options for assisted living and payment help for memory care.