Even though you’re a long time away from needing long-term care, now is the time to plan. An estimated 70% of Americans currently age 65 will need long-term care at some point, and costs can be staggering.[1] If you have a 70% chance of needing long-term care, you should think about how you would like to receive it and how you’ll pay for it in the future.
Where Would You Like to Receive Long-Term Care?
Long-term care can be administered at home, in an assisted living facility, or in a nursing home. Some people prefer to “age in place” and remain where they are most comfortable, and others require more advanced help in a specialized facility. Nursing homes can provide skilled nursing care if you have an injury or illness and can provide help with all “activities of daily living,” defined as bathing, dressing, getting in or out of bed or a chair, walking, using the toilet, and eating. Long-term care services have been shifting from hospitals and nursing homes to individuals’ homes instead. This was happening before the pandemic, but the trend has accelerated even more.
How Much Could It Cost You?
Your health is priceless, but how much will it cost you? If the biggest chunk of your nest egg is in a qualified retirement plan like a 401(k) or IRA, you may consider using those funds to pay for long-term care. Consider that the median annual cost for an assisted living facility is $51,600, and the median annual cost for a private room in a nursing home is over $105,850.[2] Know that you will pay tax on whatever you withdraw to cover these costs. But, there are more options than paying out of pocket.
How Can You Pay for It?
There are several other potential options for paying for long-term care. One of these options is traditional long-term care insurance, an asset-based long-term care insurance policy that allows you to use part of your life insurance death benefit to pay for nursing care costs. Another option includes an immediate annuity that can help cover expenses in the event that you need long-term care and a long-term care annuity.
If you know someone who takes care of their parents, you know how stressful this can be. Even if your family members are nearby and can help you around the house as you get older, they might not be able to provide you with all the care you need. It’s important to plan for long-term care, just like you’ve planned for retirement. We can help you look at all of your options for covering long-term care costs – schedule a time to speak with us.
[1] https://acl.gov/ltc/basic-needs/how-much-care-will-you-need
[2] https://www.morningstar.com/articles/1013929/100-must-know-statistics-about-long-term-care-pandemic-edition
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