Older persons -- and those who care for them -- face many challenges, not the least of which is how to pay for medical care, mental incapacity, economic insecurity, end-of-life health care decision making, and housing. As we age, our needs change in many ways including the tendency of those of us over age 65 to opt for different housing as our needs, tastes, and economic situations change. Even those remain active often find that after retirement, financial considerations sometimes require new arrangements, including housing.

On the average, older persons have greater net worth than younger persons, primarily because of the increase in value of their homes and lack of mortgage debt.

Generally, the most valuable asset owned by many elderly persons is their home which, due to inflation, has placed them in a situation of having a large home equity without allowing them to have a higher standard of living. These "house poor" elderly, in growing numbers, want to find out about ways in which to convert home equity into disposable income while keeping a suitable standard of housing. One solution is reverse mortgages through which the elderly homeowner borrows against the value of the house with no payback due until the sale of the house or the death of the borrower.

Pension plans are another source of value for older persons. At retirement, some plan participants receive -- or have the option to receive -- a lump sum distribution from their pension plan. While it might be more advantageous for them to roll over the lump sum into an Individual Retirement Account, many older persons take distributions of some or all of the lump sum in order to have access to and/or invest a large amount of capital.

Because of the increase in average life expectancy, the age of those inheriting is growing older. This means that today more than ever, inheritances will increasingly be a source of financial support for older persons. The reason: the average life expectancy of an American woman is over 80 if she survives her first 5 or 10 years of life, meaning that her children will not inherit from her until they are in their 50's or 60's. That's why it will be increasingly common for people to receive inheritances shortly before they retire or even after retirement. And an inheritance at an older age can dramatically change the way retirees live.

The average retirement age today is just above age 63. And with the average life expectancy at age 65 being 19 years for women and 15 years for men, and with most retirees experiencing a drop in income, less affluent retirees find themselves searching to replace this loss of employment income for 15 to 30 years.

Social Security was never intended to -- and does not -- totally replace the loss of employment income. In fact, lower income retirees can expect Social Security to replace about 43% of lost wage income, and those whose was greater than the amount subject to payroll tax receive a lower percentage.

About one-half of our current work force is covered under private pension plans, and almost one-third of current retirees receive monthly benefits from private pensions which varies from a few dollars per month to generous benefits that sometimes include health care.

But unlike Social Security, few pensions are indexed to keep pace with the rising cost of living. This means that most private pensions lose value over time because of inflation, and retirees who receive private pensions see their spendable income reduced over time. Bottom line: Retirees ability to continue their standard of living is difficult.

Although some retirees try to supplement Social Security and private pensions with investment income, the returns derived from their investments often does not keep pace with inflation --unless the older person either reinvests part of the income or annuitizes the savings by drawing on the principal. But if they do, with increased life expectancy, they can expect not to have enough savings to satisfy their family needs in the future.

While some elderly persons receive financial assistance from the children or other family members, the amounts received are generally insufficient. Some older persons move in with their children; however, the resulting dependency is not what most older persons want. Most would prefer to live independently, even if that means living more modestly.

Elderly persons can also take advantage of in-kind economic aid provided through governmental social service programs such as Meals on Wheels to free up income for other purposes.