We all hope to be healthy and self-sufficient long into our golden years, but according to Tom McInerney, President and CEO of Genworth Financial, “…at least 70 percent of Americans over age 65 will need some form of long term care services and support during their lives.” That’s a pretty staggering number, 70%! Given these statistics, it makes sense to plan for the unexpected.1
Most people prefer to stay in their homes as long as possible, otherwise known as aging in place. We often become attached to our neighborhood and communities, and find comfort in familiar surroundings. Therefore, choosing in-home care is a common option. However, despite home health care being the most popular option, four out of five adults underestimate the cost of care by almost 50%. To make matters worse, the price of long term home care is continuing to rise. Genworth Financial’s 2016 Cost of Care Survey states that “Over the past five years, costs have risen 11.1% for homemaker services and 6.6% for health aides.” The survey defines a homemaker as someone who provides help with common household tasks that can’t be managed alone, such as cooking and cleaning. Health aide workers provide more extensive and hands-on personal care, although not medical in nature. The median annual cost is currently $45,760 for homemaker services and $46,332 for home health aides!1
Given the huge disparity between what consumers think expenses will be and what they actually are, “…it’s so important for families to educate themselves about the costs and plan ahead for how they will pay for those costs before it’s too late, says McInerney.1 If you or someone you know needs additional cash to fund home health care services, a reverse mortgage may be an option. A Home Equity Conversion Mortgage (HECM), commonly known as a reverse mortgage, is a Federal Housing Administration (FHA) insured loan. A reverse mortgage enables seniors 62 and older to access a portion of their home’s equity to obtain tax free2 funds without having to make monthly mortgage payments.3 If you have an existing mortgage, then the balance would need to be paid off using the proceeds from the reverse mortgage. The borrower continues to own the house, and maintains title for the life of the loan, and can sell the home at any time. The loan typically becomes due when the borrower moves out of the house as their primary residence or passes away.
If you’d like to learn more about HECM reverse mortgages, please use our Reverse Mortgage Calculator or call 800-218-1415.
1 In-Home Care Costs More Than Most People Think – reversemortgagedaily.com, by Alana Stramowski, 5/10/16, http://reversemortgagedaily.com/2016/05/10/in-home-care-costs-more-than-most-people-think/.
2 Consult your financial advisor and appropriate government agencies for any effect on taxes or government benefits.
3 You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance and maintain the home according to Federal Housing Administration requirements.
Author: Meredith Manz