When it comes to retirement, the one thing no one wants to think about is a time when we will be unable to care for ourselves. But the fact is 70% of everyone over 65 will require some type of in-home care or a stay in a long-term care facility.
The average stay in an assisted living facility is 3.7 years for women and 2.2 years for a man. The average cost per year for this care is about $100,000 per year. It can be as much as $120,000 in higher-cost areas.
Even if you go with the least expensive option for care – unskilled, in-home nursing care – the average cost of $19 an hour for an aide still adds up to about $80,000 a year.
And that’s for basic care, nothing special.
Most baby boomers don’t have enough money saved to finance their retirement above the poverty level, never mind cover $80,000 to $100,000 a year. And it is not unusual for long-term care costs to run into the $1 million range.
Maybe most unsettling, though, is the fact that less than 10% of people over 50 have any long-term care insurance.
The cost of this coverage, which for the Cadillac plans is high, has kept most people away. But unless you plan on relying on Medicare, which requires spending down assets, or funding the care yourself, which amounts to a spenddown as well, you need to revisit long-term care insurance.
The good news about long-term care is that once you have it, it cannot be cancelled unless you stop paying the premium. And there are many new options available that makes this essential planning step more viable for the average guy.
There are new plans that include life insurance. So in the event the benefits aren’t used, the heirs recover some of the costs.
Planning means preparing for the worst-case scenario, and long-term care is one aspect of retirement almost everyone ignores. It is also the one that will drain your bank account the fastest.
Revisit long-term care.