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What will you do to your Grandma in this situation?
Mrs. Smith is a 70 year old widow with fragile health. She owns her home (market value of about $400,000) and collects Social Security payments of about  $1,250 per month. She has been recently discussing with her three children moving into an assisted living facility (ALF). There is one ALF that Mrs. Smith likes and where she already has some friends. It would cost about $2,500 per month ($1,900 plus an extra coming from her ?individually assessed levels-of-care? of $600. Medicare would not pay for her ALF costs. Medicaid may be a resource in the future. Briefly discuss the pluses and minuses of the following two options:   a)     The children put together a fund to cover 20 years of expenses at the assisted living facility. (Note: you need to calculate the funds needed to do so, and assume an interest rate). b)     Mrs. Smith uses a reverse mortgage to cover the expenses at the ALF. c)     Can you briefly list other options worth looking into?   Note: You must learn some of the fundamentals on reverse mortgages, and should provide some numbers. In order to do so, you may simply search for ?reverse mortgage calculator? on the web. Some info is available at Yahoo, commercial banks, and also in professional associations.   Terms: §       Independent living facility, assisted living facility, nursing home, Alzheimer care. §       Lump-sum payment, line of credit, monthly payment plan.

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