According to the US Department of Health and Human Services, roughly 70 percent of Americans over age 65 will require some type of long-term care services in their lives — costing potentially hundreds of thousands of dollars. And as healthcare costs continue to rise, unforeseen medical needs can easily derail a family’s retirement plans if there is not a smart financial planning strategy in place.
Whether you’re planning for your parents or thinking about your own retirement, it’s important to consider how you’ll fund a post-retirement lifestyle — including paying for healthcare. How much will you need to save? How much should you be prepared to spend on insurance premiums and the care itself?
To help manage healthcare expenses in retirement, many people consider options like these:
Long-term care insurance (LTCI): This may be the logical choice for many older Americans, as the funds can be used in a variety of ways — from assistance with daily activities to skilled care provided by medical professionals. But with LTCI, premiums increase with age. And each year after age 60, it becomes less likely that you or a loved one will medically qualify for coverage. LTCI often works best when purchased in your mid-50s.
A traditional home equity line of credit: While this popular option can provide access to funds as needed to help cover medical costs, it requires a minimum monthly payment on any funds taken — which in time could become burdensome.
Reverse mortgage loan: This is an often-overlooked option. A reverse mortgage can give you access to a new source of funds without the time-sensitive restraints of long-term care insurance, or the limitations of a conventional home equity-based loan. It’s very similar to a traditional home equity loan or home equity line of credit, but it’s designed with the needs of older adults in mind and offers much more flexibility — read on to learn more.
The benefits of a reverse mortgage line of credit
A reverse mortgage can support your healthcare needs and much more. Similar to a traditional home equity loan or home equity line of credit, a reverse mortgage provides access to funds that can be used as needed to cover retirement healthcare costs:
• Costly prescriptions
• Care not covered by major medical insurance
• Medical and non-medical in-home care, such as a physical therapist or home health aide
• An alternative or supplement to your long-term care policy
• Home modifications that can make your home safer and more comfortable
Healthcare needs often arise from unexpected events, such as a heart attack or fall. A reverse mortgage line of credit can help you build a more comprehensive financial defense. One big advantage of a reverse mortgage is its flexible repayment feature: No principal and interest payments are required until the last surviving borrower passes away or moves out. However, you can opt to pay down your principal and interest if and when you choose; no prepayment penalties apply. As with any mortgage, you must meet your loan obligations, keeping current with property taxes, insurance and maintenance.
REVERSE MORTGAGE FUNDING LLC
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Borrowers who elect a fixed rate loan will receive a single disbursement lump sum payment. Other payment options are available only for adjustable rate mortgages. This material has not been reviewed, approved or issued by HUD, FHA or any government agency. The company is not affiliated with or acting on behalf of or at the direction of HUD/FHA or any other government agency. © 2019 Reverse Mortgage Funding LLC, 1455 Broad St., 2nd Floor, Bloomfield, NJ 07003, 1-888-494-0882. Company NMLS ID # 1019941. For licensing information, go to www.nmlsconsumeraccess.org. Not all products and options are available in all states. Terms subject to change without notice. Certain conditions and fees apply. This is not a loan commitment. All loans subject to approval.