The Desire to Age in Place
There’s no place like home. A recent AARP survey of adults shows that 76% of Americans age 50 and older say they prefer to remain in their current home. Merrill Lynch also found that most retirees want to age in place. About 85% prefer to receive extended care in their own home and bring in extra help as they age.
However, without the help of able family members, it is critical to plan for safety and professional home care and support as well as accessibility adjustments to reduce the risk of falls and accommodate for diminished mobility or independence with activities of daily living. If the planning is not done now, it is likely that future additional expenses will accrue to sustain comfortable independence.
The Cost of In Home Care
In-home care is one of the biggest, and sometimes unexpected expenses encountered by the elderly. Long term in-home care is typically not covered by health insurance, Medicare or Medi Cal, but it is essential for safety and comfort when independence is diminished.
Many seniors do not have the income or savings necessary to pay for home care and other expenses related to aging in place. They also often don’t want to burden family members with these additional, more permanent expenses. This makes advanced planning necessary.
Covering the Costs of Aging in Place
There are several ways to cover the cost of in-home care. They include self funding , long term care insurance, asset based life insurance, and in the right situation, home equity utilizing a reverse mortgage.
Often, copays associated with a health insurance policy, combined with the lifetime caps on many policies, can shift significant medical costs to the individual. This leaves many seniors looking for a more immediate source of funds to cover the cost of home care and other expenses.
Reverse Mortgages and In Home Care
A reverse mortgage is one option worth considering for seniors who have significant equity in their home. When this is the case, their property can act as an immediate source of funds. This provides seniors with a much-needed cash infusion. Additional funds are often used to cover the costs associated with long-term care at home. Some seniors also use this cash for home modifications or other costs associated with safely and comfortably aging in place.
Reverse Mortgage Myths vs. Facts
Myth: Funds From Reverse Mortgages Count As Income
Truth: Reverse mortgage payments do not impact means tested benefits. They are not counted as income if they are spent on care in the same month as they are received. Fortunately, the most common benefits, including Medicare and Social Security, are not impacted in any way by a reverse mortgage. However, Supplemental Security Income, Medi Cal, and Veterans’ Pension eligibility may be affected. Generally speaking, reverse mortgage payments are not counted as income, as long as they are spent in the same month as they are received.
Myth: A Senior Can Outlive A Reverse Mortgage
Truth: The reverse mortgage does not come due until all homeowners have moved away from the property for at least 12 months or have passed away. The homeowner is entitled to remain in the home as long as their property tax and insurance payments remain current.
Myth: A Reverse Mortgage Can Force Me To Leave My Home
Truth: You are entitled to remain in your home indefinitely. The stipulations are that it must remain your primary residence. You also must continue to pay your property taxes and insurance in a timely manner.
Myth: My Heirs Can Not Inherit My Home If I Have A Reverse Mortgage
Truth: Your heirs can inherit the home when you pass away. To do this, they must pay off the existing reverse mortgage with cash or secure a traditional loan. In many ways, this is no different than if there were a traditional mortgage balance.
A one-size-fits-all solution doesn’t exist for funding in-home care and the modifications necessary to safely age in place. To find the option that’s right for you, it’s important to explore alternatives and consider your own financial situation, assets, and goals. If you are considering a reverse mortgage, reach out to your trusted advisors. Work with a qualified reverse mortgage professional to determine if this is the best choice for you.
