Aging in place continues to be the preference for the vast majority of older Americans. But the financial and emotional ramifications of staying in one’s current home, rather than moving to a nursing home or assisted-living facility, can be a heavy burden.
The Wall Street Journal highlighted aging-in-place issues this week by interviewing several families across the country about their “crushing“ struggles to care for aging relatives. The article noted that the growing senior population in the U.S. is expected to make these problems more widespread as about 25% of those 65 and older “will eventually require significant support and services for more than three years.“
In Nebraska, a couple has been dealing with the impact of the husband’s Alzheimer’s disease diagnosis for the past seven years. His wife tried caring for him on her own, but after that became too much, she brought in help. She has since hired and fired a string of home health care workers and now relies on a team of five aides who work round the clock.
The yearly cost of care is $240,000.
In Illinois, a man in his 90s who had been getting by on Social Security benefits saw things take a turn for the worst three years ago. Unable to walk, he also needed round-the-clock help.
The $13,000 monthly cost of care quickly depleted his Social Security and veterans benefits as well as $350,000 in savings. His daughter helped him qualify for a home equity line of credit to tap another $85,000. When he died in June at 96, he had only $45,000 left in the bank.
“My father wanted there to be something left when he passed,” his daughter told the Journal. “I had to try to avoid the conversation. It would depress him. … I always told him, ‘Dad, you’ll be able to live at home forever.’”
Data from insurance provider Genworth Financial shows that at-home care is less expensive than other options such as a nursing home. But at a staggering monthly cost of about $6,300 for a home health aide, it isn’t feasible for many Americans.
And inflation is expected to make these costs more severe, according to Genworth. Assuming an annual inflation rate of 3%, the cost of a home health aide will rise to $8,700 by 2034 and to $11,700 by 2044.
A reverse mortgage could be one way to access needed funds, with the added benefit that no payments are required until the borrower dies or leaves the home. A personal finance editor at Kiplinger made the same argument this week, noting the ample levels of U.S. senior-held home equity that rose to $13 trillion in first-quarter 2024.
“Seniors often use proceeds from the sale of their homes to pay for care in an assisted-living facility or nursing home,” the article stated. “If you prefer to age in place, you may be able to use a reverse mortgage to pay for in-home care. Creating a source of guaranteed income that ensures you’ll have funds coming in no matter how long you live could make it easier to give away money while you’re still alive.”
In July, senior advocacy group AARP revealed its ideas for a first-of-its kind, comprehensive national plan on aging. Its proposal contains four key goals that include promoting access to affordable and quality health care; ensuring access to affordable and quality long-term support services; providing opportunities to grow and preserve financial resources; and creating more livable communities that allow Americans to better age in place.
“While other countries are responding to these changes by developing and implementing national strategic plans to help them meet the challenges and maximize opportunities to increase longevity, the U.S. has yet to develop a comprehensive national plan on aging,“ AARP explained. “Importantly, aging itself is not a challenge; being unprepared for aging is.“