Retiring with little or no savings, Social Security income, and Medicare assistance can cause financial strain. Many retirees face this situation and may struggle to pay for necessary expenses, the largest of which is typically housing.
For seniors with limited fixed income, today’s housing costs can easily consume most of the budget, which has resulted in a demand for low-income retirement housing. But as the cost of living rises and more people enter retirement, affordable housing can be more difficult to secure. A growing number of resources such as nonprofit organizations, coalitions, and government programs can help retirees afford their housing expenses with different solutions, though.
Learn more about how to find senior housing within your means, whether you live independently, in an adult community, or in an assisted living facility.
Bennett Kim, founder and CEO of the simplified senior housing website ZNest, found his sister’s decision to sell her condo and move in with their widowed father comforting, but it was also a decision based on finances.
“He wasn’t eating or socializing, but with my sister there, we found that he was eating on a regular schedule,” Kim said. His father would visit the cemetery daily to help him feel closer to his deceased wife, and he and his sister took that into consideration when helping determine where their father would live. Still, the most significant factor was the high cost of senior housing communities, he said.
The cost of housing and the associated care can vary widely. According to a Genworth Cost of Care Survey, it can range from about $769 a month to $13,233 a month depending on the state and type of facility.1
Note
Despite the potential savings with living with younger family members, seniors are more likely to live alone in the United States compared to seniors in other countries.2
However, there are several housing options available for seniors with limited financial means.
- Aging in place: Living independently is often cheaper than living in senior-specific housing, but it comes with a cost. More than half of seniors living alone don’t have the money to cover basic necessities. The University of Massachusetts Boston’s Elder Index can help determine how much money you may need to live independently.345
- Living with family: Staying with adult children or other relatives has become a more common housing situation for retirees in the U.S. Multigenerational housing is one method that seniors can use to avoid poverty and avoid becoming unhoused.6
- Subsidized housing and Section 8: The U.S. federal government provides some rental and single-family home opportunities for seniors with very low incomes. However, they are difficult to acquire because the waitlists are typically long.7
- Assisted living facilities: Assisted living facilities cater to more specific healthcare needs. The amenities and services provided depend on the level of care needed. It is also dictated by the state because each state has different requirements for licensure.8
Assistance for Low-Income Seniors
Maintaining a preferred quality of life or having the money saved to meet basic needs can be a challenge even if you live in an affordable option. There are several state, government, and grant-funded programs available to help seniors mitigate living expenses.
You could likely find assistance to cut living expenses for food, healthcare, home repairs, energy costs, and internet access. Eligibility for some assistance is dependent on income requirements dictated by the state. Seniors can use the free benefits checker from the National Council on Aging to see what programs may be available.
Seniors with access to technology have fewer signs of depression and overall better well-being.9
What to Consider When Looking for Affordable Housing
Affordable housing for income-restricted seniors can be difficult to get because the waitlists often span several years. Searching as soon as possible can increase your odds of finding a desirable place to live during retirement. When you get an earlier start with securing housing, you have a better chance at accommodating your budget and fulfilling your community needs, Jennifer Prell, CEO and founder of Elderwerks, told Investopedia.
Some things to consider when looking for income-restricted homes in old age include:
- Location: The location of your housing can affect your tax rates, healthcare options, climate, access to public transportation, and job opportunities.
- Future needs: Consider the possibility that you may require specific care and services as you age. Health conditions, family relationships, and other factors can change. Think about whether the housing has the amenities and conveniences you need now and in the future.
- Issues and complaints: Research reviews for senior residences to get an idea of what you may experience. You can check online for reviews and comments on specific housing complexes. Medicare has nursing home rating systems that can be helpful in determining the right nursing home for you.10
- Type of housing: There are various types of senior housing that may focus on your age, lifestyle, and level of care you need. Each of them comes at a different cost. Understanding what you can afford and the requirements of each community will help you better understand whether independent living, active adult communities, respite care, or another housing option is right for you.
When you search for more affordable housing options, be wary of websites incentivized by referrals to corporate sponsors, both Kim and Prell said. These sites are motivated by money and may simply steer you to their corporate sponsors when other options would suit you better.
Retirees can be the targets of scams. Use community-based agencies, nonprofits, and websites without corporate deals. You can also turn to the U.S. Department of Housing and Urban Development (HUD) for more guidance and information about where to look for income-restricted housing for seniors.
5 Ways to Pay for Senior Housing
When retirees are searching for affordable housing or income-restricted housing, they each have different needs that require different costs. “We ask questions to understand who they are as a person, make sure their legal affairs are in order, and what their financial picture looks like,” Prell said. “Many of them are coming to us with no savings, no assets, and no idea of how they will afford to live.”
It’s estimated that more than 17 million seniors ages 65 and older are economically insecure, meaning they have incomes below 200% of the poverty level.11 According to one study by the National Council on Aging, 80% of older Americans ages 60 and older could not afford to pay for long-term care or withstand a financial shock.12
- Social Security: Social Security is a common and reliable income source for retirees with monthly payments that adjust with inflation. Social Security represents almost 90% of income for 12% of elderly men and 15% of elderly women.13
- Medicaid: You may be able to receive housing assistance through Medicaid for some facilities. Benefits vary by state, and it may not be accepted at all facilities.14
- Nonprofit organizations: Nonprofit organizations can help fill financial gaps related to housing. Elderwerks, Volunteers of America, and HumanGood are some examples.
- U.S. Department of Veterans Affairs (VA): Veterans may be eligible for housing benefits including financial assistance paying for nursing homes, assisted living facilities, and home healthcare.15
- Long-term care insurance: Offered by various insurance agencies, long-term care insurance covers personal care needs like nursing homes or adult daycares. It may be a viable option if you don’t qualify for Medicare or Medicaid. For cheaper policies, you could purchase long-term care insurance in your younger years, well before you may have medical conditions.
What Is the Cheapest Way for a Senior to Live?
Depending on individual needs, the cheapest way to live can include aging in place. You may have to cut daily expenses, get a roommate, live with family, or move to an area with a lower cost of living.
Local organizations and government agencies such as the National Council on Aging or Volunteers of America may be able to provide guidance on affordable ways to live for your specific situation.
What Happens to Senior Citizens When They Run Out of Money?
Running out of money is a reality for some senior citizens. They can likely experience deterioration in their quality of life without the necessary finances to meet basic needs. Unfortunately, their mental health may decline as well.
Various organizations can help in this situation, including nonprofits such as Meals on Wheels, Pets for the Elderly, and the Alzheimer’s Association. Finally, the Aging with Dignity hotline can offer support to elderly people needing to talk through difficult situations.
Can You Live on Social Security Alone?
You can live on Social Security alone, but you will likely have to budget and be frugal. The average monthly Social Security benefit is $1,837, which is below the average cost of many facilities and daily expenses to live comfortably.
However, if you already own your home, you may be able to make it work. You could also ask for help from financial assistance programs for income-restricted seniors.13
What Happens If I Retire with No Savings?
If you retire with no savings, you will have to rely on Social Security income to support you, which may mean adapting to a more frugal life. You may have to rely on resources such as support from family and friends, government assistance programs, and charities.
The Bottom Line
Finding low-income housing for retirement can be challenging. The more you prepare for your retirement in advance, the easier you can meet your retirement goals, including your goals for housing. Consider consulting with a financial advisor who can guide you through your best options for housing and other retirement topics as they relate to your finances.