For many people, aging in place can provide a higher quality of life than living in a senior care facility. It is not the best option for everybody as each person has different circumstances, but everyone should take it into consideration–ideally before they go into retirement.
Before we talk about how you can use a reverse mortgage to fund in-home care, let’s delve into why aging in place can be the best option for you.
What Are The Benefits of Aging in Place?
Aging in place can provide older adults with a higher quality of life, which can stem from a variety of benefits, such as:
A higher level of independence
When seniors move into a senior care facility, many lose a significant amount of independence. Residents in senior facilities have staff taking care of them, sometimes even if the level of care is not yet necessary. More than that, many seniors have limited freedom to make choices for themselves, from what they want to eat to what activity they want to do during the day.
In contrast, aging in place allows you to have full control over your day-to-day life, helping you maintain a high level of independence as you grow older. You live life on your own terms. And when you rely on yourself, it helps to keep you active, both mentally and physically.
One of the most difficult things about moving into a senior facility is having to adjust to a new environment all over again. It’s like moving to an unfamiliar house except there are strangers there with you, which may or may not be a good thing.
This transition can cause unnecessary stress and even lead to a decline in your mental and physical well-being–at least until you adjust to your new surroundings. However, the feeling of homesickness may continue to prevail for years. After all, if you’ve lived in your house for decades, even a high-end room at a retirement home may not compare to the home that you grew old in.
If you decide to age in place, you remain in a familiar environment that you’ve built an emotional attachment to. Moreover, staying in a familiar environment can be extremely helpful if memory issues arise.
Aging in place tends to make it easier for seniors to stay connected with their loved ones and current social circle. You won’t have to say goodbye to your neighbors, and it won’t be difficult to meet with friends and family. Even continuing to see the acquaintances you’ve made around the neighborhood can make a great impact on your emotional and mental health.
What Are The Challenges of Aging in Place?
The biggest challenge of aging in place would have to be the increasing need for support as you age. At some point in time, you may need to have people helping you out with day-to-day tasks more frequently. Although physical and mental decline is not always a guarantee, there is a good chance that you will need some form of help at some point.
Moreover, it is not uncommon for older adults to need medical help. In a senior care facility, medical staff is always present to meet your needs if need be. When you live alone, it can be difficult to get the help you need, especially during emergencies. And even if you live with someone else, they may not have the training or capacity to assist you properly.
In this case, in-home care may be necessary.
What is In-Home Care?
In-home care includes professional support services that allow individuals to live safely in their own homes. Aside from seniors, people living with chronic illnesses, disabilities, and special needs may also need in-home care to live as safely as possible.
There are different types of in-home care services. Here are a few examples that apply to seniors aging in place:
- Nursing care. A registered nurse visits the patient at their home to carry out medical services, such as wound dressing, administering medication, patient monitoring, and others.
- Basic assistance care. A caregiver or a home healthcare employee comes over and assists the patient with various chores and errands, such as laundry, grocery shopping, and cleaning.
- Health aide care. A home health aide is someone who helps a patient with basic personal needs, such as bathing, eating, walking, and dressing.
How Much Does In-Home Care Cost?
In the U.S., the average cost of in-home care is around $24 per hour. Most home care agencies charge by the hour since many seniors don’t need health care staff in their homes for the entire day (although some do). For full-time in-home care, the median cost is around $4,481 a month (44 hours a week).
Although that may sound like a very large amount, in-home care is generally a more economical option than residential skilled nursing care, which can cost around $7,500 a month on average.
However, the cost of in-home care can vary, depending on the level of care you need and the agency that will be providing it to you. It pays to browse the cost of different services from various home care agencies to have a rough idea of how much you will need if you have to obtain in-home care services in the future.
Using a Reverse Mortgage to Pay for In-Home Care
There are several ways you can fund in-home care, such as Medicaid, Medicare, private insurance, and government benefits. But what if you don’t have access to these financial aids? Or what if they aren’t enough to fund the level of care that you need?
If this is the case, don’t forget that you can use the assets that you already have. And most probably, your biggest asset will be your home.
A reverse mortgage is a great way to access your home equity to fund whatever you need, be it in-home care, hospital visits, or basic needs. It is a type of loan that allows you to borrow against the current value of your home while you retain its full ownership. Not only that, but it also eliminates your mortgage payments if you are still paying your loan off. And unlike other home equity loans, the balance on a reverse mortgage does not become due until you die, move away permanently, or sell the home.
You have to be at least 62 years old to qualify for a reverse mortgage. If you plan to age in place, you can either 1) wait to take out a reverse mortgage until you need in-home care, or 2) take out a reverse mortgage on a line of credit as early as possible so that it grows over time. Either way, a reverse mortgage can provide much-needed funds for in-home care by the time that you need it.
In general, the maximum amount that you can borrow rises with age. However, taking out a reverse mortgage earlier can help your line of credit grow over time as long as you leave it untouched. Doing so can lead to a larger amount of funds to pay for in-home care and other expenses in the future. To learn more about how to grow your line of credit with a reverse mortgage, check out this in-depth article on the topic here.
What is the best method of receiving funds?
If you plan to use your reverse mortgage proceeds to fund in-home care, the best methods of disbursement are a line of credit, tenure payments, or term payments. Tenure and term payment schemes give you your money in fixed amounts and on set schedules, such as once a month or bimonthly. These methods of disbursement allow for easier budgeting as opposed to receiving the entire loan in one lump sum.
However, the best option will have to be a line of credit. Why? Because in-home care costs can vary. With a line of credit–which serves much like a credit card–you get to withdraw only what you need when you need it. You won’t have to worry about the fixed payments running out if in case your care bill ends up being higher than you expected.
A reverse mortgage can be a powerful financial tool if you use it right. It can pay for large expenses such as home renovations, debts, and vehicles, as well as basic expenses such as food, clothes, and utilities. If you plan to age in place, a reverse mortgage can help pay for in-home care and allow you to live in your own home safely, especially when insurance and government benefits are insufficient.
Do you want to know more about what a reverse mortgage can do for you? Contact our reverse mortgage specialists today and let us help you plan for a brighter future ahead.