Most independent living communities are private-pay only, which means an elder (and their family) must foot the bill themselves. There are several ways to cover the cost of residing in an independent living community:

Personal funds: Personal income—in the form of savings, investments, retirement accounts, reverse mortgages, etc.—is the most common way seniors pay for independent living.

Social Security and pensions: Elders receiving Social Security and other types of pensions can use those funds cover retirement-related living expenses, including payments made to reside in an independent living community. This is in contrast to Medicare and Medicaid, which are more geared towards the payment of an elder's health care costs, or a low-income senior's medical and housing expenses, respectively.

Section 202 housing: Low-income elders can apply for financial assistance to cover a portion of the rent in housing projects specifically-designed for seniors, as part of the Department of Housing and Urban Development's (HUD), "Section 202 Supportive Housing for the Elderly" program. These housing units offer amenities and services (e.g. grab bars, non-skid flooring, wheelchair accessible units, transportation, meal services, etc.) geared towards helping an independent elder live on their own for as long as possible. To qualify for Section 202 assistance, a senior (62 years and older) typically must have an income equal to or less than 50 percent of the area median family income, adjusted for household size. Section 202 housing units are not widespread and they tend to have lengthy wait lists. The Section 202 Supportive Housing for the Elderly Program website offers additional information.

Supplemental Security Income (SSI): SSI benefits provide financial assistance to meet the basic food clothing and shelter needs of low-or no-income elderly (65 and older) and disabled individuals. The size of a senior's SSI benefit is based on their regular income amount, as calculated under the SSI program. For more information on SSI specifics, see the "Understanding SSI" page on the government's Social Security website.


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Long-term care insurance: Benefits vary from policy to policy, but some forms of long-term care insurance will cover independent living costs. Before signing up for a policy, make sure you clearly understand what it will and won't pay for, including which senior housing categories (e.g. assisted living, in-home care, skilled nursing) are and are not included.

Annuity: An annuity is a form of insurance that is often used as part of a retirement-funding strategy. An initial investment in an annuity entitles the investor to some form of future payment, which can be scheduled on an annual, quarterly or monthly basis, or delivered as a lump sum. The amount of money an individual receives from an annuity depends the amount of their investment and whether the future payout amount is guaranteed (fixed annuity) or is dependent on the performance of the annuity's core investments (variable annuity).

Converted life insurance policy: Life insurance policies can be converted into a Long-Term Care Benefit Plan that will disburse a monthly benefit stipend to pay for a senior's long-term care needs. Learn more about how to use a life insurance policy to pay for long-term care.