Most Americans Prefer Aging at Home, But Financial Planning Lags

A strong majority of Americans express a preference for aging in their own homes, with 73% indicating they would choose in-home care if a health event necessitated it, according to Northwestern Mutual's 2026 Planning & Progress Study. This desire is more pronounced among older generations, with 83% of Baby Boomers and 78% of Gen X favoring home-based care, compared to 67% of Millennials and 61% of Gen Z. Financial advisors emphasize the importance of planning to convert this goal into a financial reality.

The Shift Away From Downsizing

Historically, downsizing was a common financial strategy for older adults, allowing them to sell larger homes and use the proceeds to fund care or reduce maintenance burdens. However, current economic conditions, including high interest rates, make giving up a home with a low fixed mortgage or a fully paid-off property financially disadvantageous for many. Furthermore, limited housing inventory in desirable markets complicates the process and increases the cost of moving.

Beyond financial considerations, the emotional and social benefits of staying in a familiar community with established connections are recognized as legitimate components of healthy aging. This shift towards aging in place, however, removes a financial asset that previous generations relied upon for care needs.

The Growing Financial Gap

When downsizing was the norm, selling a home served as a de facto funding mechanism for long-term care. Proceeds could cover the costs of in-home aides, assisted living facilities, or other necessary services. Now, with more individuals opting to age in place, this financial cushion is absent when care expenses arise. While the home remains an asset, it is illiquid, and the cost of care continues to escalate, projected to exceed $500,000 annually by the late 2050s.

The lack of foresight is evident in the study's findings: 54% of Americans have not financially planned for their own potential long-term care needs, and 60% have not planned for caring for a loved one. This creates a structural mismatch where the asset that could fund care remains inaccessible while care needs and costs grow. Experts note that this gap must now be deliberately planned for.

Additionally, many homes are not equipped for safe aging in place, necessitating expenses for modifications. Basic renovations, such as installing grab bars or a walk-in tub, can range from $6,700 to $17,700, according to Angi. The cost of building a custom age-in-place home can be significantly higher, with one example listed for $1,225,000.

Exploring Options for Aging at Home

For those who wish to age at home but lack sufficient savings, several options exist, though they are not complete substitutes for proactive planning.

Medicare

Medicare generally does not cover non-medical long-term care, such as assistance with daily living activities like bathing or cooking. However, it may cover some care if a medical condition, like dementia, is diagnosed or if home health services are prescribed by a doctor. Medicare can reimburse for approximately 75 hours of care in such cases and may cover medical equipment like canes and walkers. It does not, however, fund home modifications.

Medicaid

Individuals eligible for Medicaid based on income may find it a valuable resource. State Medicaid programs can potentially cover home care needs. It is important to note that qualifying for Medicaid does not automatically protect a home after death; the program may seek repayment for long-term care costs, potentially affecting inheritances.

Long-Term Care Insurance

This type of insurance is designed to cover costs associated with long-term care, including nursing home care, assisted living, and in-home support. Premiums are lower when purchased at a younger age, with financial professionals typically recommending enrollment in one's 50s or 60s.

Home Equity Loans and HELOCs

Homeowners with substantial equity may consider home equity loans or home equity lines of credit (HELOCs). These options require careful consideration of interest rates, fees, and repayment capacity, as failure to repay could result in losing the home.

Reverse Mortgages

For individuals aged 62 and older, a reverse mortgage allows access to home equity without requiring monthly mortgage payments. The loan is repaid upon selling the home, moving out, or passing away. Qualification can be challenging, and associated costs include origination fees and mortgage insurance premiums.

Family Assistance

While many younger adults anticipate providing long-term care for loved ones, expecting them to fund such care can create a significant financial burden, especially as they often manage their own mortgages, childcare, and retirement savings. Family support may be a solution in some instances but is not always the most practical or sustainable option.