The often unpredictable but increasingly likely expense that awaits people of retirement age is oriented around long-term care, and financial advisors are turning to an abundance of new strategies to help their clients pay for it. One such option according to an advisor is a reverse mortgage, who offered the idea in a new story from CNBC.
The increase in premiums on long-term care insurance are rising considerably, leading financial advisors to find new ways to cover the costs. This issue is exacerbated by increasingly long lifespans for people along with a desire for financial professionals to help their clients look ahead to a day that they may require assistance with routine tasks.
“The fact is we’re a country that excels at prolonging and extending life,” said Matthew Brennan, a certified financial planner and partner at Acorn Financial Services to CNBC’s Sarah O’Brien. “The result is that the costs of care later in life, and the duration of the care, are lasting longer and longer.”
One option for seniors to make ends meet for long-term care needs is their home equity, according to Brennan.
“Once you bring long-term care into the equation, anything and everything is on the table,” he tells CNBC. “So you have to consider equity in a home. That could mean getting a reverse mortgage, or an equity line of credit that you don’t draw on unless you need care, or the full sale of the home.”
A modern senior turning 65 in 2019 faces a nearly 70% chance of needing long-term care services during their older years, according to data from the U.S. Department of Health and Human Services. Typically, women require a longer period of care than men, with women generally needing 3.7 years compared with 2.2 years for men, the data says.
Add to that the monthly costs associated with care in an assisted living facility or nursing home – which can top as much as $7,400 for a semi-private room in a nursing home – and the necessity for finding reliable financing becomes more apparent, according to CNBC.
In terms of what age seniors should begin looking ahead toward their long-term care needs, Certified Financial Planner (CFP) Katherine Fibiger, a partner and wealth advisor at Stratos Wealth Advisors in Westport, Ct. thinks that the half-century mark is generally reliable.
“I usually recommend people starting looking at it in their 50s,” Fibiger tells CNBC. “It absolutely should be part of someone’s retirement planning. Whether you should purchase insurance is another conversation, but you at least should have a plan.”
Read the full story at CNBC.