As we age, one thing becomes clear: healthcare isn’t cheap. With changing needs and lifestyle shifts, funding top-quality care can quickly become one of the biggest financial burdens in retirement. Recent estimates show that a single retiree may need around $157,500 to cover medical expenses, while couples could be looking at a staggering $315,000.1 And while Medicare and private insurance help with some of the bills, these plans don’t cover everything – which can leave you on the hook for things like prescriptions, treatments, and long-term care.
In this installment of our “Reversing Retirement Challenges” series, we’ll explore how you can navigate rising healthcare costs and protect your financial well-being, all while ensuring you get the care you need as you age.
The Challenge: Balancing Healthcare and “Aging in Place” Costs
Many of us dream of aging in place—staying in the home we love as we grow older. However, this dream can come with a hefty price tag. Although 88% of Americans aged 50-80 want to age in place,2 only 10% feel financially prepared to make it a reality.3 From necessary home modifications like installing grab bars and ramps for safety and accessibility to paying for ongoing in-home care, these expenses can add up quickly.
At the same time, healthcare costs are rising at one-and-a-half to two times the rate of inflation,4 with no sign of slowing down. In fact, the Centers for Medicare and Medicaid Services predict that healthcare expenses will grow by an average of 5.1% each year, reaching a whopping $6.8 trillion by 2030.5 To put that into perspective, a healthy 65-year-old couple retiring in 2023 could end up using as much as 70% of their lifetime Social Security benefits just to cover medical costs.4 These figures are eye-opening for anyone, but they’re especially tough for those on a fixed income. Without a solid financial plan, managing these rising expenses could drain your savings and lead to extra financial stress.
The Solution: How a Reverse Mortgage Can Help
Fortunately, there is some good news that can alleviate this stress. For many seniors, there’s an often-overlooked source of additional cash right under their roof —their home equity. A Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage, could allow you to tap into a portion of this equity and turn it into cash, all without the burden of monthly mortgage payments (as long as you keep up with property taxes, insurance, and maintenance).
Even better, you can use the funds however you like. Many seniors are tapping into this extra cash to cover rising healthcare costs and prepare for future care needs, making it a smart way to stay in your home and enjoy retirement with less financial worry.
Since healthcare costs can be unpredictable, a reverse mortgage can provide the funds you need to manage these uncertainties—both now and in the future.
- Financing Immediate Healthcare Needs
When unexpected in-home care needs come up, a reverse mortgage can offer a flexible and dependable way to get the funds you need. Whether you choose to receive cash through monthly payouts or set up a line of credit,6 a reverse mortgage provides the flexibility to access money as required without tapping into your other savings or investments. This can be especially beneficial if you’re on a fixed income and want to manage healthcare costs while staying comfortably in your home.
As we get older, it’s not just our needs that change—our homes may need to adapt as well. A house that once fit your lifestyle perfectly might now require modifications to improve safety and accessibility. Most homes aren’t designed with aging in mind, so making these updates can be crucial for maintaining independence. Using funds from a reverse mortgage is a smart way to finance essential “aging in place” improvements, ensuring your home continues to meet your evolving needs. - Planning for the Future
Thinking ahead? By establishing a reverse mortgage early—such as in your early 60s—you can create a growing line of credit7 that becomes more valuable over time. As healthcare costs continue to rise and the need for in-home care services increases, this approach can offer significant financial flexibility. Reverse mortgages can be compatible with other tools like long-term care insurance, which can help you prepare for future care needs. It can also play a key role in a broader financial strategy, aiding in estate planning and protecting your assets.
Moving Forward
Healthcare expenses don’t have to derail your retirement plans. A reverse mortgage can help cover care costs, make necessary home modifications, and handle unexpected bills—all while allowing you to stay in the home you love.8 Whether you need immediate funds or are planning for the future, a reverse mortgage can ease financial stress and offer peace of mind.
If you’re interested in how leveraging your home equity can help manage healthcare expenses and secure your financial future, the Longbridge team is here for you. Our dedicated reverse mortgage professionals are ready to guide you through the process, answer your questions, and help you determine if a reverse mortgage is the right fit for your needs. We’ll take the time to understand your goals and financial situation to ensure you have all the information you need to make an informed decision.
Curious about your home equity options? Contact the Longbridge team today to find out how much equity you might have available and explore the possibilities.
Stay tuned for the next installment in our “Reversing Retirement Challenges” series. In our upcoming blog, we’ll dive into strategies for using home equity to preserve your portfolio during periods of market volatility.
