Planning for retirement must also include where and how an individual will live out their later years. The number one response to where is: “Certainly not in a nursing home!” Well, okay, so that’s also a plan – one that might save a family about $82,000 or more annually.
The most important benefit of aging in place is living independently in a familiar, safe and healthy environment. But in order to do that, provisions must be made early on to remain in the family home for as long as realistically possible.
Not everyone who ages in place will need specialized care. But for those who will, they will receive care until such time as they are notified that home services from visiting nurses or hospice will no longer qualify and, therefore, cease. When an individual becomes unmanageable, due to Alzheimer’s or dementia, receiving care at home is no longer practical for the individual’s own welfare and safety.
Home is where the ramps and railings are
One problem with aging in place at home is accessibility – how the home is configured – if the bedrooms are upstairs, or if there is no walk-in bathtub, no shower, handrails, ramps or balance bars. These are major inconveniences, and oversights can lead to injuries, discomfort and avoidable fatalities.
According to a study by AARP, almost 90 percent of older adults wished to remain in their homes as long as possible. However, 85% have done nothing to prepare their homes for aging. Age Safe America’s latest report shows:
- 1 in 3 adults over age 65 falls each year, and 50% of those are over 80
- Falls are the leading cause of death due to injury for those over 65
- Falls cause serious injury, such as hip fractures and head trauma
- Falls account for 25% of ALL hospital admissions
- Falls account for 40% of nursing home admissions
- Of those who survive a fall, 50% never regain their independence
By implementing simple home modifications, today’s seniors are able to maintain their independence, and in the long run, save a substantial amount of money on senior living. This type of design planning is also known as Universal Design, a home designed to meet changing needs that centers on reducing hazards and making the home friendlier to limited mobility.
Taking a holistic approach to home improvement leading up to aging in place, like simplifying landscaping, repairing and replacing windows, swapping out door handles, and organizing closets and storage areas is an integral part of the planning.
Getting to know Medicare
Medicare is a federal government health insurance for people 65 or older, certain people under 65 with disabilities, and people of any age with End-Stage Renal Disease (ESRD), permanent kidney failure requiring dialysis or a kidney transplant.
Unfortunately, Medicare and most private insurance do not pay for the cost of home modifications. Aging in place has the potential to address many of the financial and health challenges that burden seniors and their formal and informal support structures, including taxpayers who fund Medicaid and Medicare.
If needing home care, a health aide service would cost around $21.00 an hour, depending on your location. Non-medical help, as in homemaker services, would average around $20 an hour. Medicare pays for part-time in-home, skilled nursing care and home health aide care, per doctor’s certification, if the individual is homebound and needing intermittent skilled care according to Medicare definitions.
Long-term care, on the other hand, is private insurance and provides for care at home, in the community, in an assisted living facility or in a nursing home. It includes non-medical care for people who have a chronic illness or disability. Non-skilled personal care assistance, like help with everyday activities of daily living, including dressing, bathing, toileting and others, called custodial care, is available, which Medicare does not pay for.
For 20 percent of people between the ages of 65 and 74, who’ve lived in their homes for many years, they’ve already paid off their mortgages. But some may not be able to stay in their homes due to higher utility and property taxes.
The National Aging in Place Council (NAIPC) is working to establish a system to validate the reverse mortgage movement by using trained staff to educate older adults who want to learn more about their options. Often considered a last-resort source of income, reverse mortgages have become a useful retirement planning tool because they make sense for people who don’t plan to move. Generally, you don’t have to pay it back for as long as you live in your home. However, converting part of the equity in your home into cash without having to sell your home or pay additional monthly bills can be more complicated than it appears.
The Federal Trade Commission says a reverse mortgage can use up the equity in your home, which means fewer assets for you and your heirs. When you die, sell your home, or move out, you, your spouse, or your estate would repay the loan. Sometimes that means selling the home to get money to repay the loan. It’s important to review the different types of reverse mortgages, and comparison shop before you decide on a particular company. Your Hefren-Tillotson advisor can advise you on the dos and don’ts of reverse mortgages to best fit your needs.
Dollars, cents and having a plan
Aging in place sounds exclusive to the elderly. However, any type of healthcare situation remains the eternal “wild card” to retirement planning. With illness, injury or disability comes the concern of how care will be provided and how much it will cost. Instinctively, when the cost becomes more than the family can afford to pay, they look to other means to support the necessary care. The logical choice is existing income from Mom or Dad’s income portfolio, so they cut expenses to divert that income to paying for care.
Except that lifestyle expenses don’t go away once a loved one becomes disabled. If anything, expenses increase. So when it becomes increasingly more difficult to pay expenses from income, families turn to the investment portfolio but shudder over what the long-term impact to it might be. They do not want to touch the investment portfolio, but realize that while it is protected under normal circumstances, these circumstances are anything but.