If you don’t feel you’re financially prepared to live beyond the age of 75, you’re not alone—less than half of Americans believe they are.
In 2012 alone, about 9 million Americans over the age of 65 will have received long-term care services, and by 2020, that number is expected to reach 12 million, according to the Centers for Medicare & Medicaid Services (CMS).
However, a Long-Term Care Awareness Study conducted by Northwestern Mutual found that only 46% of Americans feel they are financially prepared to live past age 75, and even fewer (38%) say they feel prepared to live beyond age 85.
That could end up being a big problem, especially because Americans are living longer than ever before. One-third of the study participants haven’t considered their potential long-term care financial needs and the impact of their longevity and lifestyle on their future financial situation, says Northwestern Mutual.
“The increase in longevity coupled with economic uncertainty elevates the need to protect their nest egg while planning for long-term needs,” — Steve Sperka, vice president of Northwestern Mutual.
Another key finding of the study: About 21% don’t know about all of the options available to them, should they eventually require long-term care, while one third (32%) of respondents either weren’t sure how they planned to address future care needs, or just didn’t plan to address them at all.
Not thinking about future needs won’t prevent them, though. About 70% of Americans who are currently 65 or older will need at least some long-term care, according to the U.S. Department of Health and Human Services, whether it’s in the form of nursing home care or receiving assistance with daily activities at home.
Using a Reverse Mortgage to Pay for In-Home Care
An overwhelming majority (about 90%) of Americans would rather stay in their homes as they age rather than move into some sort of care facility or retirement community, according to AARP.
While many prefer to remain at home due to familiarity and comfort reasons, it can also be a more affordable option compared to institutional settings.
A private room in a nursing home cost a median rate of $81,030 a year in 2012, according to The Genworth 2012 Cost of Care Survey. In contrast, the national private pay median rate charged by a licensed home health agency for a home health aide was $19 an hour during the same time frame.
For some, even in-home care may not be affordable, the Northwestern Mutual study suggests, but a reverse mortgage could help you stay in the comfort of your own home and pay for a home health aide, if needed.
The federally insured Home Equity Conversion Mortgage (HECM) program allows people who are 62 and older to tap into the equity they’ve built up over the years as homeowners. The amount you’re able to draw down from your home depends primarily on your age and how much equity you’ve built up over time.
The program can help retirees age in place and afford in-home care through a non-recourse loan that can be received in a few different ways, whether in a lump sum, in monthly installments, or as a line of credit.
Getting a reverse mortgage can help you plan for—and cover—your long-term care needs both current and future.
If you’re interested in learning more about taking out a reverse mortgage and how it could factor into preparing for longevity and possible long-term care costs, we’re here to help. Contact us today.