As you approach your golden years of retirement, a critical component of your financial strategy includes factoring in how long you may live and how long your money will last. People are living longer lives—more than one in three of today’s 65-year-olds will live to age 90.1 With increased longevity comes the increased possibility of requiring long-term health care at some point in life.
Long-Term Care (LTC) refers to the services and support that you may need to meet your health or personal needs over a period of time. Not defined as medical care, the care provided varies according to multiple factors and includes assistance in helping you live a normal life and completing everyday tasks. These tasks, known as Activities of Daily Living or ADLs, include eating, bathing, using the toilet, transferring (moving from place to place) and more. ADLs account for the majority of long-term care assistance.
Due to population changes, increasing lifespans and soaring healthcare costs, preparing for the possibility of needing long-term care has become an essential part of a comprehensive financial strategy. Over 70% of those ages 65 and older will require some sort of long-term care due to either health issues or complications associated with natural aging.2 With aging comes a natural decline in eyesight, hearing, strength, balance and mobility—as well as the increased possibility of developing an assortment of illnesses and ailments.
Often long-term health care is provided by a spouse, family member or friend. In other situations where unpaid care may not be an option or where dedicated full-time care is imperative, paid care is provided by a home health or care aide, nurse, or therapist. It can also be provided in an Assisted Living Facility or nursing home.
Time is not always on your side and thoughtful decision-making for this stage is essential to prepare for the unknown. Too many postpone making critical financial decisions until after an injury or illness occurs. Why wait? Preparing for long-term care can help ease and relieve an enormous amount of physical and emotional stress during difficult times. Financial preparation for this stage can also reduce stress on unpaid caregivers, who often cease common hobbies or activities they enjoy in order to provide care.
Long-term care comes at an increasingly high cost. While a home health aide charges a national median cost of $20 an hour, the cost of a semi-private room at a nursing home is on average $6,844 per month. A private room costs an average of $7,698 per month.3
There are essentially three ways to pay for care:
Relying on government-sponsored programs to cover the cost of your care can be risky. Medicare only pays for care if you require skilled services or rehabilitative care. It also covers care in a nursing home for a maximum of just 100 days and does not pay for ADLs.2 Medicaid does cover more services, however, to qualify your income must be below a certain amount.
Long-term care insurance can help cover the services and support you may need that is not covered by traditional health insurance or government programs. By reimbursing you for the costs associated with care, LTC insurance allows you to carry on with your life with the care you need while reducing the risk of relying on unpaid caregivers or using up your retirement savings. Pre-retirees or those in their 50s are at a prime age to consider purchasing insurance.
North Star has a team of experienced long-term care insurance specialists that work directly in conjunction with your financial advisor. Established in 1996, our Brokerage division has remained cognizant of the need for long-term care insurance since its start. Chris Sitek, Vice President of Life Business Development at North Star, specializes in incorporating long-term care insurance into an overall financial strategy. Partnering with North Star’s financial advisors, Chris tailors coverage to meet the specific needs and desires of clients.
Contact a North Star Resource Group financial advisor to discuss your options for long-term health care.
1 “When to Start Receiving Retirement Benefits.” Social Security Administration Publication, No. 05-10147. Published October 2016. https://www.ssa.gov/pubs/EN-05-10147.pdf.
2 “Long-Term Care: The Basics.” LongTermCare.gov. Last modified February 21, 2017. https://longtermcare.acl.gov/the-basics/index.html.
3 “Genworth 2016 Cost of Care Study.” Conducted by CareScout®. Published April 2016. https://www.genworth.com/services/servlets/pdf/coc2016.
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