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How much money will you spend on long-term care in retirement? It’s a difficult question to answer. You can’t predict your health needs or how much long-term care will cost in the future. However, you can reasonably expect to need care at some point. The U.S. Department of Health and Human Services estimates that retirees have a 70 percent chance of needing long-term care.1
There are a couple of variables that impact the cost of care. One is the type of care you need. Long-term care can be delivered in many forms. You could simply need help with chores and basic tasks around the house. Or you may need a full-time health aide to assist with things like mobility, bathing and more. You may even need to move into an assisted living facility.
Another important factor is how long you need care. Again, that’s difficult to predict. Some people only need care for the final months of their life. Others suffer from long-term disorders such as Alzheimer’s and need care for years.
While you can’t accurately predict your care needs in the future, you can develop an estimate based on current costs and projections. You can then use that information to develop a funding strategy. The information and guidance below will help you estimate your potential needs. Discuss your options with a financial professional to develop a strategy that’s right for you.
Type of Care
Long-term care is a broad term that applies to a variety of services, including a home aide, adult day care, assisted living and others. The type of care you need has an impact on the cost. Medicare may cover some services but not others, and some services cost more than others.
Fortunately, you can use current pricing data to develop an estimate. Genworth’s annual study of national long-term care prices found the following average monthly costs in 2018:2
• Adult day care: $1,560
• Assisted living facility: $4,000
• Homemaker services: $4,004
• Home health aide: $4,195
• Semiprivate room, nursing home: $7,441
• Private room, nursing home: $8,365
You may want to consider how much of this cost is covered by Medicare or Medicaid. Medicare may cover a stay in a skilled nursing facility if it’s related to specific treatment and a recent hospitalization. Also, starting in 2019, some Medicare Advantage policies will cover in-home custodial care. However, Medicare usually only partially covers these costs.
Medicaid will also cover care in a skilled nursing facility. To qualify for Medicaid, however, you must have little income and few assets. While the eligibility rules vary by state, in general, seniors have to spend down their own assets to qualify for benefits.
Duration of Care
Clearly, the longer you need care, the greater your costs will be. However, the duration of your care depends on your health needs, which you can’t predict today. The U.S. Department of Health and Human Services has estimated that the average woman will need care for 3.7 years and the average man will need it for 2.2 years. Of today’s 65-year-olds, 20 percent will need care for more than five years.1
Given the costs listed above, it’s easy to see how long-term care could drain your assets if it’s needed for years. Many seniors choose to minimize this risk by purchasing long-term care insurance. You pay premiums to an insurer today, and then the insurer pays for some or all of your long-term care costs in the future, depending on the specifics of your policy. Many insurance policies cover care provided either in the home or in a facility.
Ready to discuss your long-term care strategy? Let’s talk about it. Contact us today at Judy Financial Group. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18148 - 2018/10/17