Looking at Reverse Mortgages? You may want to
Planning for retirement is on the hearts and minds of almost every single Baby Boomer, roughly 76 million Americans. Survey after survey happens to lead to the fact that planning for health care as well as planning for Long-Term Care (LTC) is a major concern.
The reason for this is that many of these Baby Boomers are starting see first-hand, through their parents or aging loved ones, how healthcare can impact their future.
For many of these Boomers the sheer thought of being in a nursing facility as they age is one that sends sheer terror through them. We have all heard the adage from others when the subject is broached that they will take matters into their own hands before that will happen to them.
Well, statistically it looks very much that the will in fact have to take matters into their own hands, but thankfully not that drastic and the reason is simply the law of supply and demand.
According to the Kaiser Family Foundation there are, in 2014, 15,401 skilled nursing facilities in the United States. Within in these facilities there are roughly 1.63 million beds to accommodate the elderly and as of 2014 the number of beds occupied was just over 1.34 million.
This leaves roughly 300,000 beds available today for those who need care in a nursing facility.
The issue though is what the Department of Health and Human Services (DHHS) tells us. According to the DHHS out of the 76 million Boomers entering retirement roughly 70% of them will need some form of LTC or just about 53 million people.
Out of these 53 million people, according to the DHHS, 25%, or roughly 13 million, of them will need to stay in a nursing facility for about 3 years.
Obviously, the simple solution would be to build more nursing facilities, but again the law of Supply and Demand kicks in.
In order to build any nursing facility, the facility must be staffed with not only qualified nurses to provide care, but also qualified physicians who can prescribe care as well and the problem that we are facing is that there is a shortage in both fields.
According to the American Medical Association the United States is facing about a 95,000 doctor shortage as well as an 800,000 nursing shortage.
The reason, again, is simple. Colleges and Universities are still graduating the same number of these professionals as they were in 1993 even though the nation’s population has increased by about 40% since that time.
The question now becomes “Where will the Boomers, about 14 million, convalesce as they age?”.
That answer, hopefully, is also obvious as they will not have many options other than to have care administered in their homes which is the main reason why a Reverse Mortgages become an option.
As the Boomers begin to age simple things like walking up and down a flight of stairs becomes an issue. The average cost for just one chair lift to meet this need, according to Arrow Lift, is about $3,000 to $4,000.
Now think about your home and the homes of many people in the United States. How many homes have the master bedroom, the kitchen, bathroom and laundry on all the same floor?
The answer: not many and for more than most they will need to have a least 2 chair lifts in their home.
The other issue is bathrooms, as many of them are not that accessible and need to be elder proof in order to accommodate walkers and wheelchairs as well as providing the necessary accommodations to be able to get in and out of the shower.
The other little missed concern is simply how wide a hallway may be. This becomes a huge dilemma with those that need a walker or wheelchair to move around the house. Now, imagine if there are two people in the house that have the same needs.
Ever watch a couple who both need walkers to navigate the same hallway, especially when both have a need for the bathroom?
In order to elder proof a house retirees are looking at spending tens of thousands of dollars at a time just to meet their needs to make their homes livable. The bigger problem, though, is that these adjustments to their home happen over the course of their retirement and not all at once.
Yes, they can simply draw money out of their savings, but please consider the fact that their health coverage through Medicare is based on their income.
These withdrawals from their retirement accounts will be considered to be income in the eyes of Medicare. As their income increases and if it goes over certain limits retirees could face higher Medicare premiums through surcharges and these surcharges will be automatically deducted directly from their Social Security benefit.
Just by withdrawing money from their retirement account in order to meet their needs to live they just might wind up costing themselves a good portion of their Social Security benefit.
With a Reverse Mortgage or any equity from their primary residency the proceeds generated from their home will not be used against them when their health is on the line as this form of revenue is not defined as income.
Ultimately, a Reverse Mortgage can provide the necessary funding to provide care within the home while helping retirees control their health coverage costs and save more of their Social Security benefit.
Many people may be find the subject a little bit off-putting, but the time to discuss a Reverse Mortgage is needed before it is really needed.