Many senior citizens struggle with the problem of how to manage their long-term care. Most seniors will need some form of long-term care, while on average, a 65-year-old will need some form of long-term-care services for three years during their life, according to the National Clearinghouse for Long-Term Care Information.
This is a serious and expensive problem. Nursing homes are expensive. The average cost of a one year stay in a nursing home is $77,380 (or $212 per day!) according to the Metlife Mature Market Institute. That number is expected to almost triple over the next 20 years, assuming a 5 percent rate of inflation in long-term-care costs. That rate of cost increases could prove to be low since medical costs tend to rise faster than general inflation. The costs of having a care giver provide services at home is significantly less than a nursing home but can still be substantial.
Other options for long-term care are no less expensive
Although nursing homes and in-home medical care offer high quality service, many seniors would be most comfortable if a family member could provide the majority of their care. While many grown children would like to help their parents, financial concerns often make it impossible for an adult child to meet their parent’s needs. Adult children will usually be working to support their own family, so taking an extended break from work is a luxury few could afford.
For seniors who own their home, a reverse mortgage can unlock the equity in their home. A reverse mortgage could also be the key to an innovative financial solution for obtaining long-term care.
Many seniors understand that their adult children are facing financial pressure and in many families, both spouses need to work to be able to pay a mortgage. Freeing a family from a mortgage payment could eliminate the need for one spouse to work. A reverse mortgage could make that possible.
Reverse mortgages: the innovative financial solution to long-term care
A senior citizen could use the proceeds from a reverse mortgage to buy a nearby home. That could be given to an adult child. Freed from the need to work to pay a mortgage, the adult child can then become a primary care giver when the senior needs long-term care. This saves the senior a great deal of money since the cost of such care is worth hundreds of dollars a day. The home they buy can be considered an investment in their long-term care.
Reverse mortgages are an innovative financial tool that could make many things financially feasible for many families. More seniors could take advantage of these loans to make their retirement easier.