I’m asking becuase my aunt wants to buy a house soon and she’s planning on filing for her retirement benefits also so is there anything we should know about before we buy?
Standard Social Security retirement benefits (the kind you get when you reach retirement age) are not “means tested” and they don’t care if you own a house, or anything else. If she’s going to get a mortgage, the bank might care what her benefits are going to be when calculating her income.
thanks
I’ve been on Social Security for a few years now, and nowhere on the application is home ownership even asked for. Having lots of money locked up in a house is not an unusual situation for seniors.
As for the other part of the question, I found that retirement is all about cash flow. If your aunt is going to take out a mortgage, look at income, expenses beyond the mortgage, property tax, reserves for repairs, and reserves for things like a new car or an emergency.
One reason Medicaid started doing spend-downs (monthly deductible for qualified people of low or moderate income) was because there are quite a few seniors, and some younger people on disability, who are income-qualified for Medicaid but own too much property.
My parents owned their retirement house in NJ. They were not obliged to sell it when they went into a care home; which was fortunate, my stepmother was incompetent, and the process of selling the house became complicated - the courts there don’t want family taking advantage of non-competent elderly. In the end she died before the problem was legally settled, so my father could consent to the sale. This was fortunate, because the house mortgage / line of credit was up for renewal, and that would require indicating that the house was unoccupied, which would have negated any insurance. Insurace requires the property be constantly monitored, preferably by a tenant.
The property did not negate my parents’ eligibility for subsidy in a care home (Medicare?) but my dad did cancel his eligibility for 2 years since he’d given his nieces $30,000 a few months before going into the home. Logically, you cannot give away your money and then expect Medicare to pay your way. I assume he would have restarted that waiting period if he’d distributed the proceeds from the house sale. (Little fuzzy on the details, my nephew handled the finances since he was living only an hour away from them)
So as you can see - as others say, there may be no problems when your aunt wants to buy a home, but she has to plan for what happens when she’s in, let’s say, her late 80’s or early 90’s and a house is too much. Or if she cannot make decisions for herself. She should sign the necessary powers (to be effective when she encounters problems) or some such, and figure out who is/are making decisions for her. She definitely should talk to a lawyer sometime in future and not avoid the subject. This is probably a more important discussion when it could be an issue in 20 years or less depending on her health, unlike the average home buyer who may have 40 or 50 years to think about this.
That was Medicaid , not Medicare. Two different programs. Medicare is for people receiving Social Security benefits and doesn’t pay for custodial care ( nursing home or home care). Medicaid is means-tested , pays for custodial care and has income and asset restrictions (but the source of income doesn’t matter - could be work, public assistance or Social Security). And there are a lot of rules regarding Medicaid and assets - for example, although a person may receive Medicaid while still owning a home (if they or a spouse still live there) the state agency that handles Medicaid can place a lien and recoup the benefits when the house is sold or the person dies.
Quibble. Medicare is for people 65 and older. You can get Social Security benefits before you qualify for Medicare, and you can get Medicare before you collect any Social Security benefits.
Thanks.
I guess my dad was sort of lucky that he didn’t qualify, since no lien was placed on the house.
I guess the point for the OP is that there may be no problem buying a house, the issues might arise much later. But I assume that applies to anyone who owns a house.
Please get professional advice for your aunt. A lot of money is involved, make sure everything is done correctly.
Exactly.
A friend of mine is planning on retiring later this year, and moving to another city to be near family. She is planning on purchasing a condo there before she formally retires, because her income will look better to a mortgage company while she’s still earning. She could still afford it with her pension / 401(k) / social security, she just wants things to go as easily as possible.
If the aunt’s retirement income will be sufficient to cover the mortgage on the new place, there should be no problem at all. If she’s worried, she could do as my friend is planning, and make the purchase first.
Further quibble: Medicare also covers people under 65 who have been receiving disability benefits from Social Security or the Railroad Retirement Board for at least two years, and also some other disability situations. You can get Medicare at age 18 if you have Lou Gehrig’s Disease, for example.
A caveat: There are a lot of people who are confused about a program called Supplemental Security Income (SSI) program. This program provides monthly payments to adults and children with a disability or blindness who have income and resources below specific financial limits. SSI payments are also made to people age 65 and older without disabilities who meet the financial qualifications.
For a couple or reasons, one of which is well, Security Income is right there in the name, and because it is administered and distributed by the Social Security Administration, some people think it is another Social Security Program. It is not. It is strictly a welfare program, and is means tested. Make sure your aunt is going on Social Security and not Supplemental Security Income. They have entirely different eligibility requirements.