aging

The Costs of Care Giving

As the Boomer population ages and the reality begins to loom that at some point they may need someone to provide them with “care giving” but no one wants to talk about this possibility happening to them.

But as we age and I’m going to be 72 myself  ( Yikes, when did that happen?) our bodies are going to start to give us trouble as we begin our slide down the slope of aging and at some point, we may need help.

Ideally the Boomer generation has taken better care of themselves then our own parents did and we certainly are much more active than their generation who smoked, didn’t exercise and had high fat diets.

But at the least, they didn’t have as much stress in their lives as we seem to have in our’s and their generation lived a much slower daily pace compared to the hectic lifestyles so many of us have in this period of time.

Hopefully those of you who are reading this post and are of a “certain age”, will manage to dodge falling apart and having to rely on a care giver.   But what happens if you need one and you don’t have Long-Term-Care Insurance?

Medicare will not pay for this service in case you were under the impression it would, you have to pay for it.

You will have to rely on your own retirement funds if you happen to have any and pay a professional care giver or rely on family members to take care of you.   And that’s a terrible option.

There are two kinds of “costs” in this equation, the actual monthly expense that can run $4000 or more each month while you are helpless or the physiological  and turmoil and burden to your family members who will be overwhelmed by the responsibly of taking care of you.

And if you don’t have enough funds to cover this expense, it will be up to your children to pay for it and in many family situations, the adult children will fight among one another and it typically will fall to one of the children to pay for all the expenses and also to attend to your needs.  And the one’s who refuse to help in any capacity, will disappear.

As for paying for the care of a professional, licensed and Bonded care giver that expense could be paid by the funds from a reverse loan and it will become a safe and valuable option for money to cover the costs and relieve the adult children from using their own funds to pay for your care.

It’s something to think about, utilize one’s equity to pay for your own needs and not rely on your adult children and keep your dignity and keep your family intact.

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Social Security is Increasing for 2018

But don’t get excited about this awesome news, because it’s only increasing 2% which on the average, will boost up benefits 20 to 25 bucks a month.

Just imagine how you could spend that extra money you will be receiving beginning in January of next year.  Ummm, let’s see?  I can think of a number of thrilling possibilities.

New tennis balls in lots of different colors for your Walker.  Or extra money to blow at the Dollar Tree Store where one can find so many awesome deals, especially the junk from China.

Or maybe a couple cocktails at a Denny’s restaurant where you can get a Senior Discount when you order some of their nutritious food.

“Yes”, I am being sarcastic I know.   But really only 2% increase?

I may look very youthful in my picture on this website, but I’m a senior too and if I wasn’t working I would be standing on a street corner begging for money and food.

I’m lucky however, because I enjoy being a Reverse Loan Consultant and meeting many wonderful and amazing people who are considering using the funds from a Reverse loan to pay for medical expenses   ( I just had a partial knee replacement in August.), home improvement, care giving or maybe simply taking that long “talked about, one day we will go to Maui” and finally doing it.

The number one concern of everyone, but especially seniors is out-living their retirement funds ( If they have any) and not being able to afford to remain in their home for the rest of their lives.

But there is an option, a wonderful option and no one should be “scared” to look into the FHA  government insured loan program just for seniors affectionately referred as the HECM.

Its smart to find out if you would benefit from it or not, plus it’s better than being reduced to groveling each month for enough money to pay on going expenses and staying awake at night in a state of fear.

Oh and by the way.   I have a Reverse loan on my home that I used to pay off two mortgages I had at the time during the height of the Recession and Financial “crash”.  So unlike the majority of any of my competitors,  I’m qualified about the advantages of using the loan because of my own experience.

And I’m glad I did.  It was a great decision at the time and I don’t regret it.

If I hadn’t taken advantage of using a Reverse mortgage for my own situation, I would have lost my home in a foreclosure as I was quickly running out of money.

Whew!

 

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Long Term Care Expenses

Most people are completely unprepared to pay for any costs associated with “care-giving” because it never occurred to them that at some point in the future they may very, well need help as they age.

And unfortunately if you haven’t purchased a LTC policy by the time you are in your 50’s, the premium will be very expensive later on, especially if you have developed some health issues and qualifying for the insurance will now be difficult and or too expensive to obtain.

Everyday a senior experiences either a fall, a stroke or a medical procedure that will require nursing and help of some sort within the home and  since few people have purchased Long Term Care Insurance, they and their family will find themselves in a crisis to come up with a solution.

If the senior has a substantial amount of money they have saved over the years, they could use it to pay for their care but if they don’t then maybe it will be the adult children who will have to use their own funds to cover the expenses associated with hiring a service to take care of the family member who needs it.

And a very frightening fact is that 70% of those who are 65 or older will have some sort of situation happen where they are going to need help and they won’t have any way to pay for it.

Typically it becomes the responsibility of a family member and the burden of that responsibility is extremely difficult as it up ends the family dynamic, the caregiver is unqualified to care for the parent and their own life becomes overwhelmed and in some cases, they develop serious health issues of their own due to the ongoing stress of being a caregiver.

An excellent option for the entire family is to use funds from a Reverse loan to pay the costs, plus any cash reserves the senior and their family may have, will be protected from being drawn down and the real fear of running out of money is eliminated.

I have found that more Financial Advisors are suggesting this alternative to their clients and families in lieu of drawing down on their investments and possibly experiencing tax consequences and it is an excellent solution to use to pay for the care-giving expenses and removes the fear and stress a family is experiencing when they don’t have the funds to pay for the services that are needed for the family member.

Funds from a Reverse loan is an excellent option to consider to cover these costs and relieve the worry and burden the senior and their family.

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New Reverse Loan Lending Limits

FHA increased their Lending Limits effective as of January 2nd. 2017 for all of the loan programs that they offer.  This includes Reverse Loans otherwise referred to sometimes as HECM/Home Equity Conversion Mortgage.

The increase wasn’t huge but it certainly could make a difference for some seniors who wish to pay off an existing loan that has a high balance and take advantage of more of their property’s value to achieve this, because the new limits will bump them up for the Principal Limit ( the amount of money they are entitled to receive).

The new Lending Limit is $636,150 over the previous one of $625,500.

What this means to a potential borrower is the possibility of a bit more funds at the close of escrow, especially if they were short to pay off an existing large mortgage.

The other area of change, is how seniors are using the funds from a Reverse loan.

I have found that more of my clients are putting a Reverse Loan Line of Credit in place to avoid drawing down on any investment portfolio that they may have and by doing so, extend the longevity of their investments and avoid any tax consequences.

And many seniors are quite concerned about the possibility of out living their money and how to pay unforeseen medical expenses as they age.  By having a Line of Credit in place, it gives them another option to be used for unplanned expenses such as “care-giving” and other expenses associated with aging.

And it’s important to understand the following:

  • The property remains in the estate and transfers to the heirs when the last borrower passes away
  • The Title remains in the name of the borrowers or their Trust
  • There are no mortgage payments, but property taxes and Homeowners insurance must continued to be paid by the borrower(s)
  • There are “No Costs” Reverse Mortgages available
  • Sell current property and buy down to a smaller property using a Purchase Reverse loan.

 

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What About Social Security?

My previous two posts share information from a study that was completed this year by the Harris Poll for Northwestern Mutual to investigate how many Americans will be prepared to retire and what are their concerns about the possibility of outliving their funds?

Social Security provides an iota of money each month to seniors but certainly not enough to pay ongoing cost of living expenses, medical expenses or caregiving costs and if the senior doesn’t have a pension or other funds to use, what are they going to do?

New Study Underscores Retirees’ Need for Non-Traditional Funding Sources
Posted By Jason Oliva On June 7, 2016 @ 5:32 pm In News,Retirement,Reverse Mortgage

“Non-retirees also plan to rely upon Social Security less than their retired counterparts, with 35% of non-retired Americans expecting this benefit will be their sole or primary source of retirement income, compared to 49% of current retirees.

Social Security is often one of the main sources of income for people over age 65. But this stalwart asset, which has long been considered one of the three legs of the traditional retirement stool, may soon face depletion by 2034, according to the Security Board of Trustees for the Social Security Administration in a report submitted to Congress last summer.

But while there has been some talk that reverse mortgages could support the traditional retirement stool, joining Social Security and personal savings as defined benefit pensions become increasingly less common, the acceptance of using housing wealth as a retirement funding source is hobbled by a widespread apprehension to borrow against home equity.”

American seniors currently retain over 12 trillion dollars in home equity and honestly?   In spite of the fear and misunderstanding of the Reverse loan, it will come to the rescue for many seniors and their families.

They are now affordable, even a No Costs version is available, non taxable because it’s not income, they continue to own their home, it never goes to the “Bank” and its very, very safe.

But then again,  I am a Reverse Loan Consultant…..

 

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