#36 Using a Reverse Mortgage to Prepare for Long-Term Care Costs
TAKING CARE OF LONG-TERM CARE WITH A REVERSE MORTGAGE
So far, so good, you’d been thinking. In fact, looking back over the five or so years since you retired from the corporate world and became a part time entrepreneur, you’ve kept your financial head well above water. Although 2020 included some scary moments in terms of your investment portfolio, year-end results turned out far better than expected. What’s moiré, in consideration of the pandemic, you’d cut back on travel expenses and were able to add to your portfolio assets rather than drawing them down.
Meanwhile, serious health setbacks suffered by several of your close friends and business allies got you thinking about your own vulnerability when it comes to future healthcare costs. You’ve read about the advantages of “aging in place”, but realize that should illness strike, the cost of even part-time home healthcare services would put enormous strain on your resources, probably forcing the erosion and eventual liquidation of all your investment assets.(According to caring.com, the average monthly cost of in-home healthcare in Indiana as of 2020 is $4334, you’ve learned). Up until now, you have not purchased Long-Term Care insurance, and you realize that is an inevitable next step; you want to make sure the policy would cover the costs of care at home
In “re-ordering” your budget to accommodate your new awareness of financial vulnerability due to deteriorating health, consider using the equity in your home as a backup funding source. Once your reverse mortgage is established, you can set up a regular “draw” to cover Long-Term Care insurance premiums. Alternately, the HECM can be structured as a line of credit, earning interest until such time as you can no longer generate earnings from your business to cover the premiums.
You’re wise to turn your concern over your fiends’ health setbacks into action, rather than allowing worry to consume your energy. A government-insured reverse mortgage might be your way of taking care of Long-Term Care.