While 89% of Americans over the age of 55 wish to “age in place”, only 34% believe they can afford it according to a recent survey from Today’s Homeowner. So, what will the other 66% of older adults do? Will you rely on your adult children to financially care for you? Will you live in your children’s basement? Or would you rather be financially independent and not be a burden to your children as you age? These questions are real questions that we all must take time to think about.
The cost of aging is an absolute concern for most older Americans. With rising housing/ living expenses, medical expenses, prescription costs, etc. As a matter of fact, these are not just concerns for older Americans, but it is also a concern for their adult children. The children of many baby boomers and aging parents are now considered “the sandwich generation”. The sandwich generation refers to middle-aged individuals who are helping to support both aging parents and growing children. This generation is “sandwiched” between their children and their parents. There are several trends that are contributing to this sandwich generation. One of the largest factors is increasing lifespans, while the other primary factor is rising costs of living. It does not take a calculator to realize that the longer we live, the more money we will need. Plus, the more expensive housing becomes, along with the increased cost of gas, groceries, medicines, insurance, etc., the more money we will also need. Therefore, these once again are putting financial pressures on all of us as we age, and we must figure out how we will continue to afford our monthly expenses.
On top of the expenses for aging parents, the sandwich generation is also continuing to support their own children and incurring those ongoing living expenses and possibly college expenses as well. Plus, these folks must also work on their own retirement plans and save money for their own future at the same time.
With all that being said, the best gift that an aging parent can give to their children is to remain financially independent for as long as possible and ideally for the remainder of their life. The gift of being financially independent is truly a gift for everyone in the family. It not only avoids a financial burden for adult children, but it also reduces many financial worries and stresses that older adults carry when they are unsure how to make ends meet.
One of the most powerful solutions to this concern is to use some of your home equity. If you own a home and you have a significant amount of equity in your home, this should be one of the first places that you turn for cash. There are several loan products out there that allow you to access some of the equity in your home, without having to sell your home. However, the best option to access some of the equity in your home while aging in place, and not incur a monthly mortgage payment, is a Home Equity Conversion Mortgage (you must still pay your property taxes, homeowner’s insurance and maintain the home). This financial tool is extremely flexible, has great tax benefits, allows you to retain ownership of your home, still pass your home onto your heirs and more!
