Addressing the potential threat of long-term care expenses may be one of the biggest financial challenges for individuals who are developing a retirement strategy.
The U.S. Department of Health and Human Services estimates that 70% of people over age 65 can expect to need long-term care services at some point in their lives.1 So understanding the various types of long-term care services – and what those services may cost – is critical as you consider your retirement approach.
What Is Long-Term Care?
Long-term care is not a single activity. It refers to a variety of medical and non–medical services needed by those who have a chronic illness or disability – most commonly associated with aging.
Long-term care can include everything from assistance with activities of daily living – help dressing, bathing, using the bathroom, or even driving to the store – to more intensive therapeutic and medical care requiring the services of skilled medical personnel.
Long-term care may be provided at home, at a community center, in an assisted living facility, or in a skilled nursing home. And long-term care is not exclusively for the elderly; it is possible to need long-term care at any age.
How Much Does Long-Term Care Cost?
Long-term care costs vary state by state and region by region. The 2019 national average for care in a skilled care facility (single occupancy in a nursing home) is $102,200 a year. The national average for care in an assisted living center (single occupancy) is $48,612 a year. Home health aides cost a median $23 per hour, but that rate may increase when a licensed nurse is required.2
What Are the Payment Options?
Often, long-term care is provided by family and friends. Providing care can be a burden, however, and the need for assistance tends to increase with age.1
Individuals who would rather not burden their family and friends have two main options for covering the cost of long-term care: they can choose to self-insure or they can purchase long-term care insurance.
Many self-insure by default – simply because they haven’t made other arrangements. Those who self-insure may depend on personal savings and investments to fund any long-term care needs. The other approach is to consider purchasing long-term care insurance, which can cover all levels of care, from skilled care to custodial care to in-home assistance.
When it comes to addressing your long-term care needs, many look to select a strategy that may help them protect assets, preserve dignity, and maintain independence. If those concepts are important to you, consider your approach for long-term care.
1. U.S. Department of Health and Human Services, 2019
2. Genworth 2019 Cost of Care Survey
Citizen Advisory Group is a comprehensive financial services firm that helps Northwest Ohio and Southeast Michigan’s soon to be retired and retired residents effectively plan for and prepare for life’s greatest journey. In addition to helping clients with their finances, Citizen Advisory Group offers monthly health and wellness events.
Please call 419-872-0204 for a complimentary consultation to review your individual situation.
Investment advisory and financial planning services offered through Advisory Alpha, LLC, a Registered Investment Advisor. Insurance, Consulting, and Education services offered through Citizen Advisory Group. Citizen Advisory Group is a separate and unaffiliated entity from Advisory Alpha.