Don’t Overlook Long-term Care Costs -- Submitted by Chuck O’Keefe

How much money will you need in retirement? To arrive at an estimate,
you should consider various factors, such as where you’ll live, how much
you plan to travel, and so on. Not surprisingly, you’ll also need to think
about health care costs, which almost always rise during retirement. But
there’s one area you might overlook: long-term care. Should you be concerned
about these costs?
In a word, YES.
Expenses for long-term care – which can include receiving assistance at
home as well as prolonged care in a facility – can be surprisingly expensive.
Consider the following statistics, taken from the 2016 Cost of Care
Study issued by Genworth, an insurance company:
The average annual cost for a private room in a nursing home is more
than $92,000. And in some places, particularly major metropolitan areas,
the cost is considerably higher.
The average annual cost for full-time services of an in-home health care
aide is more than $46,000.
These costs are certainly daunting. Of course, you might think that you
won’t have to worry about them, because you won’t ever need any type
of long-term care, particularly if you’ve always been in good health and
your family has no history of later-in-life cognitive impairment. However,
the odds may not always be in your favor, because almost 70% of people
turning age 65 will need some kind of assistance or long-term care at
some point in their lives, according to the U.S. Department of Health and
Human Services.
Given the costs of long-term care, and the possibility that you might really
need this care, how can you prepare for the costs?
Things may change in the future, but at this point, you really can’t count
much on government programs to help pay for long-term care. Medicare
typically pays for only a small percentage of these costs, and, to be eligible
for Medicaid, you must have limited income and assets. In fact, you
might need to “spend down” some of your assets to qualify for Medicaid
long-term care services. Obviously, this is not an attractive choice, particularly
if you’d like to someday “leave something behind” to your family or
favorite charity.
Consequently, you need to look at your options for paying for long-term
care – just in case. You could earmark a certain percentage of your investment
portfolio to cover long-term care costs; if you never need this care,
you can simply use the money to pay for other areas of your retirement
or for other purposes, such as charitable gifts or financial support to your
grown children or grandchildren.
Or, as an alternative, you might want to work with a financial professional,
who can recommend a strategy specifically designed to help you
address long-term care costs. The marketplace in this area has evolved
rapidly in recent years, so you should be able to find a solution that is
both affordable and effective. Keep in mind, though, that the earlier you
purchase a long-term care solution, the more economical it will likely be
for you.
In any case, don’t delay your planning for long-term care. Knowing that
you’re protected against potentially catastrophic costs can make your
retirement years less stressful for you and your family.