An important part of planning for retirement is determining what your long-term care needs may be as the costs can add up quickly and put a large dent into your savings. The average yearly cost of nursing home care in a semi-private room was $90,155 in 2019, rising to $102,200 for a private room.1 Long-term care insurance is available, but these policies can be expensive. The most commonplace for long-term care is in the home.2
Long-term care is defined as a variety of services which help meet both the medical and non-medical needs of people with a chronic illness or disability who cannot care for themselves for long periods.3 More than half of retirees (56%) believe that Medicare will cover long-term care expenses, however, this is not the case as it does not pay for ongoing long-term care.4
An option many retirees can consider when planning for long-term care costs is a reverse mortgage. A reverse mortgage allows qualified homeowners, who are 62 or older, access to a portion of their home’s equity as cash. Borrowers do not have to repay the loan as long as they live in the home as their primary residence, pay property taxes and insurance, and maintain the property according to the Federal Housing Administration (FHA) requirements.5
A reverse mortgage may be a good option if the homeowner can continue to live independently in their home. They can use the proceeds from a reverse mortgage to purchase long term care or make modifications or improvements to their home (making it safer and more accessible) which can allow them to age in place for the foreseeable future.
Another reason a reverse mortgage may be able a valuable option is to assist with long-term care if one of the spouses needs immediate assistance. The funds received from the reverse mortgage can help with expenses associated with in-home skilled care.
If you’re interested in learning how a reverse mortgage may help with long-term care, call 1-800-976-6211 to speak with a licensed loan officer.
5You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.