Someone turning 65 has nearly a 7-in-10 chance of needing long-term care in the future, according to the Department of Health and Human Services, and many don’t have the savings to manage the cost of assisted living. But they may have a mortgage-free home — and the equity in it, giving them the potential option of a reverse mortgage to help cover care costs.
Here’s how to evaluate whether a reverse mortgage might be a good option.
Advantages of a reverse mortgage to fund in-home care
Your home is generally one of your biggest assets, and using its value to handle long-term care costs can make sense.
Beyond potential implementation of a reverse mortgage, there are seven other critical decisions that should be made in the decade preceding retirement, according to the column. These include laying out a general plan for your life; determining exactly what your needs will be based on assets and living situation; refocusing your assets and income on yourself and/or your spouse if supporting children; and avoiding major life changes which can be particularly disruptive in the decade preceding retirement.
Disadvantages of a reverse mortgage
Reverse mortgages can solve a problem, but there are downsides to using the equity in your home to cover costs.
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This article was written by NerdWallet and was originally published by The Associated Press, annotated for brevity.
About the author: Kate Ashford is a personal finance writer at NerdWallet specializing in Medicare. She has more than 15 years of experience writing about personal finance.