In a study conducted with a sample of 1,000 older adults across all 50 states, only 11% of respondents revealed that they would actively investigate reverse mortgage product options if it became clear that their assets and savings would not be enough to cover later life care. Nearly 50% of respondents also said they were not financially prepared for such costs after retirement.
The study, conducted by caregiver supply marketplace Carewell, showed that tapping home equity through a reverse mortgage to cover such care costs are generally far down the list of considerations.
According to the study, the leading consideration is the use of Medicaid or other government-sponsored assistance at 57%; looking for senior assistance programs (48%); relying on family or friends for assistance (43%); selling a home or property (41%); or moving to a more affordable area (40%).
While having a slight advantage over reverse mortgages, seeking out long-term care insurance saw only a marginally higher response rate (15%); followed by exploring senior housing or alternative caregiving arrangements (23%); and selling off assets or belongings (36%).
In terms of seniors’ reported top fears regarding the financial aspects of senior care, the dominant fear for 64% of respondents is having insufficient retirement savings to cover care needs. That fear only slightly edged out the fears related to the high costs of medical and long-term care (63%); followed by fear of outliving existing financial resources (43%); and becoming a burden on loved ones (36%).
The study determined that the most expensive states for senior care are Alaska and Massachusetts, respectively. The cost of living in Alaska is roughly 30% higher than the U.S. national average, but “the state’s average income to cost of care ratio was the worst in the nation, emphasizing the challenges seniors and their families face in affording necessary care,” the study results said.
Massachusetts and Maine were the second and third most expensive states based on income-to-cost ratio rankings, while the least expensive states for senior care are Alabama and Texas due to the “abundant care options and comparatively lower costs” found in those states.
The study’s methodology was to collect state-level cost data for six varying types of senior care, along with 2021 median income data for people aged 65 and over, and combine that with cost of living data.