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Long-Term Care

Living long with dignity is a basic human need.  Yet living longer often comes with a high emotional and financial cost without the right financial plan.  It is surprising to learn that 70% of people 65 and over will need long-term care.  Most people think they will be part of the 30%.  But research shows 7 out of 10 people over 65 will need long-term care at some point in their lives.    https://aspe.hhs.gov/basic-report/what-lifetime-risk-needing-and-receiving-long-term-services-and-supports 

There are two concerns that impact financial planning when it comes to long-term care decisions.  First, who will provide care?  Most caregivers are unpaid family members, usually an adult daughter with her own responsibilities.  Independent clients often express concern over becoming a burden on their children when they need care.   The thought of becoming dependent on someone for care is difficult to embrace.  There is much to consider.  For example, how will this impact their life?  Will it strain their relationships or finances?  Will they need to uproot and move to take care of you?  Lack of long-term care planning often causes family disputes and stress.  And continuing stress can harm both the caregiver and the loved one needing care.   

The second concern is paying for long-term care.  Most people think the government will cover their long-term care costs.  The challenge is that Medicare only covers the first 100 days of a nursing home after a hospital stay.  For the government to cover your long-term care needs in a nursing home, you must spend down your assets to qualify for Medicaid.  And while there is an exception to this for certain wealthy people, it is not the rule for the majority.  Another challenge with depending on the government to fund your long-term care is that your choices of care settings is limited to a skilled nursing home.  And often the room is semi-private.

Some clients think they can save enough money to cover their long-term care needs.  The challenge with using savings is the amount needed.  According to Genworth, the annual cost of care for a semi-private nursing home room in 2021 is $95, 867.  The annual cost of a private room is $109,026. 

Men, on average, need long-term care for 2.2 years and women for 3.7 years.  Someone with Alzheimer’s may need care for five or more years.  Using 2021 information, the cost of staying in a nursing home could be well over $210,000 for a man, doubled for a woman, and could exceed $545,000 for someone with Alzheimer’s.  Most people do not have savings or assets to cover the cost.   

Longevity risk and outliving your money in retirement is a true threat.  According to EBRI, only 56% of Americans are prepared to meet their expenses in retirement.  This means the shortfall for older Americans in retirement is over 40%, including long-term care costs.   

With a financial plan, you have many choices to fund your long-term care costs in retirement.  Whether you want unused benefits to pass to your heirs or you only want to cover your expenses, the professionals at Airey Financial Group can help you choose.  Use the form below to contact us or call us at 219-650-4050.  We look forward to speaking with you.