When you are planning for the future you must address all eventualities if you want to be completely prepared. It is easy to expect that your retirement years will be full of fun and leisure time, and assume that all you have to do is prepare for this period and the subsequent passing of your assets to your loved ones after you die. However, there is an interim between your active retirement and your passing known as your “twilight years.” It is important to address some of the expenses that you may incur during this phase of your life, and long-term care costs are one of them.
A lot of people don’t realize just how likely it is that you’re going to need long-term care at some point in time. Seven out of every 10 senior citizens are someday going to need long-term care, and 25% of people aged 85 and up are living in a nursing home at any given time. The segment of the society that is at least 85 is actually the fastest growing group among us. When you look at these figures it is clear that you may well spend some time in a long-term care facility. Using current figures, the average stay in a nursing home in the United States costs around $200,000, so we’re not talking about a drop in the bucket.
One way that you can address these costs would be to take out a home equity conversion mortgage. These are reverse mortgages that are federally insured, and to qualify you need only be 62 years of age and have significant equity in your home. You can live in the home until you choose to move or pass away and at that time the loan becomes due.
You could use the funds that you receive from the loan to pay for in-home care if it was necessary. There are those who take out a reverse mortgage and use the income to purchase long-term care insurance. So if you had to move into a long-term care facility your insurance coverage would handle the costs and you could then sell the home, pay off the reverse mortgage debt, and keep the sum that was left over.