Why home equity should be part of the long-term care conversation
Retirement in America brings with it many financial and health concerns, with the two issues often intertwined.
Long-term care is becoming a major concern for older Americans, especially since its costs will likely have to be covered from a fixed income. This is one reason why home equity can be a notable difference maker and should be part of the conversation.
This is what Sandra Block, personal finance editor, says Kiplingerin an article about dealing with retirement hurdles and the considerations surrounding spending later in life.
More than half of 65-year-old adults will need some form of long-term care. according to 2019 data of the U.S. Department of Health and Human Services (HHS).
“At the same time, only 8% of Americans have long-term care insurance, so most seniors will rely on their savings and government assistance to pay for long-term care,” Block wrote.
Establishing a timeline of expenses and obligations can be important in determining a path forward, especially if an older person does not want to wait until his or her death for a supportive inheritance to be paid out to a family member. Long-term care should be an important consideration, and one possible way to address these costs and other spending goals is to integrate equity, Block said.
With reference to data from the National Association of Reverse Mortgage Lenders (NRMLA), housing equity held by seniors has increased to more than $13 trillion by the first quarter of 2024. Leveraging this equity by converting it into liquid funds could be an option for the right person, she explained.
“Seniors often use the proceeds from the sale of their home to pay for care in a residential care center or nursing home,” the article says. “If you prefer to age at home, you may be able to use a reverse mortgage to pay for in-home care. Creating a source of guaranteed income that keeps money coming in no matter how long you live could make it easier to give money away while you’re still alive.”
An increasing number of Americans believe that retiring at the traditional age of 65 is “unrealistic,” according to data from a financial services firm. Equivalent.
Senior debt levels are also growing based on data from the Employee Benefits Research Institute. But seniors have also expressed more optimism recently about achieving their retirement goals as inflation has eased in recent months, according to survey data from Charles Schwab.
