Key advancements in healthcare and healthy lifestyle habits are extending lifespans leading to a rapidly growing aging population. In fact, the Census Bureau projects that by 2035, the number of Americans aged 80 and older will reach 24 million – double the number from 2016.
But what happens when the support systems for this population can’t keep up? The growing share of older Americans will need access to quality care, effective government benefits, and affordable housing. And this raises some questions. Are we ready for this massive wave of seniors? And will this group be able to afford their needs when the time comes?
Affordability is a major concern for many in or approaching retirement. With changing needs and lifestyle shifts, accessing top-quality care can become very expensive. In fact, healthcare costs, along with housing, are two of the most significant expenses for today’s retirees – A trend that sure to continue. Here are a few figures highlighting the challenges seniors currently face in finding affordable care and housing:
- Up to 80% of individuals aged 60 and older are not financially prepared if they require long-term care services or face financial shocks.2
- Among older adults, one in seven will need care for more than five years.2
- In 2023, the average cost of a home health aide was $75,000, while the cost of an assisted living facility averaged $64,200 annually.3
- An overwhelming majority (88%) of seniors want to “Age in Place” and live in their home for as long as possible.4
With an established need for services supporting our aging population, it is crucial to evaluate how well these systems are running and where they are headed. Whether you need these services or facilities now or in the future, they will without a doubt play a key role in supporting you, your loved ones, and your community. It is never too early to plan for this crucial stage of life. Your future (or current) self will thank you!
Concerns for Long-term Care Facilities
Facilities providing skilled nursing and care for seniors face many challenges, with staffing being a major concern.4 Nurses and caregivers not only need adequate healthcare training, but also the ability to handle the more personal aspects of the job. They interact with older adults who may be dealing with physical ailments, loneliness, or cognitive decline. When staffing issues arise in these care facilities, deficiencies within the establishment become increasingly evident.4
Interestingly, despite the growing share of older adults in our population, the number of skilled nursing facilities is declining. Between 2015 and 2023, the number of institutions certified by the Centers for Medicare and Medicaid Services fell by 4%, and the number of residents in nursing homes dropped 12%.5
This trend may seem counterintuitive, but it reveals a shift in how individuals are seeking care during their golden years. More and more people are looking to age in place. This option could offer you greater flexibility in how you receive care, allowing you to remain comfortable in your own home while being supported by your loving network of family and friends.
Pursuing Alternative Options for Care
Caregiving is a unique industry with often blurred lines. If you rely on an in-home nursing service for medical support, but on a family member for assistance with daily activities, what really differentiates the types of care? For families with healthy savings and financial freedom, coordinating caregiving can be viewed as a thankless favor. For others, however, the cost of providing care may impose a massive challenge, both financially and personally.
Though often underappreciated and unacknowledged, the importance of caregiving cannot be ignored. It is estimated that the value of unpaid caregiving sits at $600 billion.6 Whew! This massive figure underscores just how essential it is for seniors to have access to the care they deserve and the support systems to help them get there. In many cases, the responsibility falls on adult children and sometimes, grandchildren. This care includes transportation, help with preparing meals, providing essential items, companionship, and countless other acts of service.
In recognition of this shadow industry, many states offer programs for family caregivers to register their care and receive financial assistance through Medicaid state plans. However, these programs are not universally accessible and do not always approve eligibility. Because relying solely on these programs may not be the most dependable avenue for receiving financial support for long-term care, it is wise to prepare yourself financially through other mechanisms.
Building Out Your Affordable Future from Home
As we’ve established, long-term care is something that many of us will need to plan for. And it’s no secret that it can be costly and require significant resources. Of course, there are many different paths to take when it comes to securing your financial future. People start saving for retirement at different times and come from various financial backgrounds. Your ability to build a strong financial portfolio and safety net can be influenced by factors such as your education, career opportunities, and even personal circumstances like divorce.
Though financial security may seem daunting, you may already hold the key to your financial future – right in your home. That’s right, your home’s equity could be a valuable resource! A Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage, could allow you to tap into the wealth in your home as a supplemental source of retirement cash flow. Available to homeowners aged 62 and older, this loan could provide you with the means to leverage your hard-earned housing wealth in a way that’s tailored to your goals.
Healthcare costs can be largely unpredictable, so it’s important to consider and plan for every outcome. While we all hope to stay healthy, the reality is that you or your loved ones may require care, and many seniors today are opting to receive this treatment from home.
A reverse mortgage can help you create a personalized plan for your needs as you age. Whether you need a larger sum upfront for a renovation project, or a steady cash flow stream to support ongoing healthcare costs, you can work with a professional to determine how to best configure your loan.
In addition to this flexibility, there are several key benefits of a HECM that could ease financial pressure in retirement:
- Optional Monthly Mortgage Payments: With a reverse mortgage, there are no required monthly mortgage payments, so long as you keep current with property taxes, homeowners insurance, and home maintenance. You choose how much, if anything, you’d like to contribute – and how often
- Income Tax-Free Funds: Cash from a reverse mortgage comes from your home’s equity, which already belongs to you, so it’s not considered income. Therefore, proceeds are not income taxable. As always, we recommend consulting a trusted financial advisor and appropriate government agencies for any effect on taxes and government benefits.
- Protection for Heirs: As a non-recourse loan, reverse mortgages offer protection that ensures neither you nor your heirs will ever owe more than the value of your home at the time of its sale.
While cash from a reverse mortgage can be used however you wish, many opt to leverage their home’s equity to fund long-term care needs. This could allow your loved ones to step back from a caregiving role and instead, step into one focused on support and love for you.
Although securing an affordable future can be challenging, Longbridge is committed to helping homeowners like you realize the power of home equity as a financial solution. Our loan officers are ready to answer any questions you may have about reverse mortgages and how they can be utilized to help you achieve your goals. It is essential that you feel comfortable learning about this financial tool, and we are here to provide you with all the information you need to make an informed decision. To learn more about whether a reverse mortgage is right for you, contact our team today!
