Managing the cost of getting old

By Karen Cifala

I believe a noble trait of growing old is to focus more on the quality of the life we have left and by maintaining it to the best of our abilities, and then accepting nature taking its course—which it ultimately does no matter what we do. We need to think of our natural aging process more in terms of give and take. Living well and living healthier includes living responsibly and, hopefully, living longer. Being pro-active and pursuing the more affordable preventive health care still require serious efforts on our own behalf every day for as long as we can manage.

Baby boomers (born between 1946 and 1964) are starting to retire: their expected longevity is increasing, though it doesn’t necessarily result in a better quality of life. While we are truly lucky to be alive and able to benefit from some of the modern medical achievements, we still must find ways to pay for treating these diseases and accommodating disabilities. The cost of healthcare for this group is expected to triple by 2050; not to mention housing costs and home and assisted care.

Another facet of growing old is figuring out how to pay for this great privilege of longevity. While many of us have made some sort of financial plans for our retirement years, there are just as many who might not have been fortunate enough to do so. Whichever bucket of life you are in, there will be times when you struggle to figure out how to pay for your existence. It’s kind of like real estate. I tell my clients, “You either spend money going into the purchase of a house, or you spend money when you sell it. You don’t get off scot-free.” So it is with life: “You can’t have it all,” says Suzan Herskowitz, an estate planning attorney in Winchester. One of the many questions that she regularly answers for her clients has to do with how to pay for living longer.

For example: if one aging spouse needs additional care and the biggest asset they own is their home, one option is to sell their home to pay for the care. However, they indicate that they want their children to inherit the house—but they also need the money for their own care. You can’t have it both ways. But Suzan point out that if one spouse still resides in the home, Medicaid will exempt the house for their overall financial assessment.

Here are some things to think about.

Do not transfer assets without professional counsel. In the real estate world, you don’t run out and buy a new car just before applying for a new home mortgage. The same is true when trying to maneuver the financial gymnastics of paying for your own personal care. It is advisable not to add the children to the ownership of the home, and not to deed anything to the family—such as the house, or insurance policies—until you get legal and financial counsel.

Reverse Mortgages. One option for obtaining cash when the decision to downsize to a more age-appropriate home is made is a reverse mortgage. These types of mortgages have been federally protected through HUD since 1989 and there are no restrictions on how a borrower uses the loan proceeds. The money from the reverse mortgage can be used to buy a smaller house outright, before the bigger house is sold, so the smaller house is ready when needed. Even though the borrower would not have a monthly mortgage payment, they would still be responsible for all real estate taxes, homeowner’s insurance, and HOA fees on both homes. And the reverse mortgage loan can only be obtained on a primary residence.

Many seniors, according to Lisa Carper, a reverse mortgage advisor, also see the value of utilizing their primary home’s equity to purchase income-producing rental properties. She notes that in Winchester, a couple used their reverse mortgage proceeds to purchase a home in a 55+ community that they intended to rent out until they were ready to live there, thus providing them with a monthly income. Once they are ready to downsize, they will sell their current home and pay off the reverse mortgage in full. The couple would recoup any and all remaining proceeds left from the sale of their current home and they would move into their 55+ community home which has already been paid for.

Another choice for a reverse mortgage would be to take the proceeds as a monthly income and stay in the home. This may help the senior avoid depleting liquid assets, or payments could be structured to avoid disqualification from a government sponsored program.

A well thought out transition plan can benefit the entire family, especially if a crisis hits. A good legal and financial advisor can help direct you towards the right course of action specific to your needs. There is no magic “best plan” for everyone, and it’s important to have your legal paperwork and insurance policies reviewed regularly.

Medicare is another challenge that we all face, whether just signing up or reviewing annual plans. Luckily, here in Clarke County there is a free service called Medicare Café which offers informative lectures, personalized appointments, and reviews.

Change is the biggest constant in our lives. Our wishes and plans need to keep pace with those changes.

Next month: Medicare, insurance, investments, and other transitioning resources.


Medicare Café:  Next meeting Sept 30 at VFW in Berryville 10-12 a.m. FREE, or contact Marty Schiller, 540-551-5615 to set up an appointment.

Suzan Herskowitz, attorney, estate planning, 540-664-8336,

Lisa Carper, reverse mortgage advisor, 540-327-3913,


Karen Cifala is a senior real estate specialist for REMAX Roots in Berryville, Va. She welcomes receiving feedback and enjoys helping people facilitate transitions in life. You can call her anytime at 303-817-9374 or email her at