When planning for retirement, many Americans focus their attention on securing enough money to pay for daily necessities like food, car insurance, and whatnot but often overlook one important cost: long-term care costs. Nearly two-thirds of Americans haven’t planned for the possibility of long-term care because they think they’ll never need it. Think again.
Nearly 70% of people age 65 and older will need some type of long-term care at some point. To be considered for long-term care, you have to need help with two of the following: eating, toileting, dressing, continence, bathing, mobility. That’s almost three-fourths of the population, so you can’t assume you’ll be the exception to the rule. It might end up costing you big.
Long-term Care Costs Are Not Cheap
You probably already know that long-term care costs are not cheap. Nothing medical related is cheap anymore. However, you may not know just how high the costs can pile. The average cost for a nursing home is nearly $100,000—a year.
Of course, the preferable option would be staying at home where you’re the most comfortable and familiar. The average cost for a quality home health aid starts at $20 an hour and only goes up from there. The average home health aide makes just over $47,000 a year.
Another option is adult day care, which costs, on average, around $70 a day. Five times a week equals $350, totaling at $1,400 a month. That’s easily a house payment. Sadly, more than 50% of people end up paying for long-term care costs out of pocket, with nearly 70% paying out-of-pocket for at-home costs.
Medicare Won’t Pay for Long-term Care
If you’re one of the 57% of Americans planning to have Medicare pay for long-term care costs, you might want to rethink that option. Unless you’re destitute, Medicare won’t pay for your long-term care costs. Medicare doesn’t cover extended nursing home stays (it does cover short-term up to 20 days) or at-home costs.
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Consider Getting Long-term Care Insurance
Long-term care insurance can help protect your future financial well-being. Unfortunately, only 11% of older Americans have long-term care insurance. Ensuring you get the care you need in your older years while also not struggling to pay for that care is priceless. In the 30 years since long-term care insurance has been introduced, prices have gone down substantially, and the earlier you buy, the lower your premiums will be.
HSA for America’s Financial Planning Program
Step 4 of our Financial Planning Program is planning for long-term care, detailing how to make sure nursing home expenses don’t break the bank. This special report gives more detailed information and insight into all things related to long-term care.
For more information, talk to your Personal Benefits Consultants. They can go over options and offer guidance. Planning for the future doesn’t have to be confusing. Let us help you make it simpler.
Here are some additional pages related to this article: Financial Protection Program 4: Planning for Long-term Care Needs | 6 Basic Steps on Retirement Planning
Wiley is President of HSA for America. He believes that consumers should have choice and price transparency, so they can make the best healthcare decisions for their needs. Read more about Wiley on his Bio page.