For the next few weeks we will be addressing the proverbial elephant under the throw blanket in most of our financial housing - the Cost of Aging. If we do not take these points into consideration our golden years could become tarnished.
This week - Housing: The cost of available options - courtesy of Bendix Anderson.
Aging senior citizens often face difficult decisions about where they want to live. Most – more than 90 percent – want to stay in their
current homes as they grow older, according to research from AARP.
Remaining in a single-family home can involve expensive renovations, as seniors become more frail, and potentially even more-expensive home health care services.
Moving to a seniors housing community, like an assisted living property or a nursing home, may be even more expensive. Many seniors lack the financial resources to pay for it, though homeowners typically have more financial reserves than elderly renters.
Selling a single-family home may help finance a move to a seniors housing community – and home prices have recovered much of the value lost in the crash. Most older Americans owned homes in 2012, including 78.4 percent of people older than 80, according to Census data.
Selling a home may also help pay for a move to rental housing, though the cost of an apartment has also risen faster than inflation in many markets. Seniors may also struggle with the transaction costs of selling a home and moving.
Even selling a home may not pay for a nursing home for very long. The typical homeowner aged 65 and over has enough wealth to cover the cost of a nursing home for just 42 months – less than four years, according to the Joint Center for Housing Studies.
Private insurance policies cover 60 to 70 percent of the cost of long-term care – but the cost of premiums are much more expensive than what many older adults can afford, averaging more than $4,100 per year for persons over 75 years old. Just 11 percent of households aged 65 and over had private long-term care insurance in 2010, according to the Congressional Budget Office.
Medicaid is the default option without financial assets or long-term care insurance to pay for long-term care. That includes two-thirds of nursing home residents aged 65 and over, according to the CBO. To qualify, individuals must spend down or otherwise dispose of their assets. Home equity may be excluded for a time, but Medicaid eligibility criteria include home equity limits and most states will try
to recover expenses from beneficiaries' estates, according to the Joint Center.
When you are ready to make some of these decisions give me a call. As an Accredited Financial Counselor (AFC) I am able to assist in your budgeting so that you won't run out of money. Also, As a Certified Aging In Place Specialist (CAPS) I can help you to decide how best to spend some reverse mortgage proceeds on home remodeling so that you can safely stay in your home.
Marc has 36 years in financial services and 6 years in teaching.
Visit Us on Google