“Do you have enough home equity to pay for long-term care in retirement?”

Do you have enough home equity to pay for long-term care in retirement?,” by Bill Schmick, The Berkshire Eagle

“A home equity conversion mortgage (HECM) might simply be a fancy term for a reverse mortgage, but there are an increasing number of advisers and planners who are using them for an entirely different strategic planning purpose. If you ask most couples in their 60s and beyond what is one of the greatest fears for their future, I’m betting that going bankrupt and/or losing their home and life savings as a result of nursing home bills would be right up there near the top. … In its simplest form, a couple — of which at least one must be 62 years of age or older — can take out a HECM, or what amounts to a reverse mortgage. But instead of receiving a standard monthly payment, you elect not to take these distributions until the day you need the money to pay for outside nursing care.”


LTC Comment (from Stephen A. Moses, President, Center for Long-Term Care Reform):

Very interesting twist on how to use a reverse mortgage to fund long-term care. Of course, this method, like the others, won’t be used much as long as Medicaid exempts several times the average older homeowner’s equity.