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The biggest threat to the financial security of retirees.

With more and more baby boomers reaching retirement age, there is a looming threat to your financial security that is largely unprepared for.  In fact, 75-80% of retirees have no plan to even prepare for long term health costs.    There are 2 main reasons only 25% of mature citizens have prepared for this expense; Lack of awareness and the cost associated with preparing.  No one likes to admit that they will need this help as they get older.   People are living longer now, which amplifies the cost needed to prepare for healthcare events.  The typical assisted living facility can range from $5,000/month to $8,000/month.  Just one year of this expense can be $60 to $100 thousand dollars.   Perhaps some believe that Medicare will cover these costs; Medicare will only cover the costs for a little over 3 months.  These costs are usually paid  for by medicaid/medical for up to 100 days, or by another family member, personal assets (usually sale of the home),  or Long Term Care Insurance.  At $80 to $100 thousand a year, this can demolish a lifetime of savings in a few short years.

Hope is not lost, there are new and varying options to prepare for events as these. A Reverse Mortgage can be a useful tool in preparing for long term care.  The money taken out with a RM can be used to purchase a long term care insurance policy.  This will give you the peace of mind of knowing that you will have the care necessary, if you ever need it.   A RM allows you to pull out your home equity, without a mortgage payment or risk of losing the home, it also allows you to keep your foot in the housing market; which in the local area gained 20% last year, 12% this year, and is predicted to gain another 12% next year.  For a $500,000 home value a RM allows you to get the $60,000 in equity predicted to come  in 2015.    By permanently going into a care facility one would have no part in that $60,000 gain but will pay $60 to $100,000 in costs.

A RM in association with in home health care is a fantastic fit.  There are innovative companies that are designed to help seniors to age in place.  One of these companies is Full Circle America, a technology based service that can provide sensor and video monitoring, quick call buttons, reminder calls, and recommend in home care.  Their services start at $3.50/day.  A local company is Homehero.org.  This company allows a senior to go online and watch videos of potential caregivers and choose the one they feel with best fit their needs.  This care starts at around $15/hour for non-medical care.  For those that look into preparing for future medical needs it is very apparent that a Reverse Mortgage will go a long way in assisting their preparations, whether they choose long term care insurance or aging in place.  If you would like to anonymously look at what a Reverse Mortgage would do for you, click here, for our Reverse Mortgage calculator.

 

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