Do You Have Enough Saved to Afford Long-Term Care, in the Event that it’s Needed?

Long term care is a scenario many families don’t like to think about. Aging is uncomfortable and the uncertainties that come with health concerns and alternative housing are enough to make anyone nervous. All too often, we see clients whose parents have simply avoided the conversation until emotions are high and money is needed immediately.

How Expensive Is Long-Term Care?

Statistics show that more than half of all people aged 85+ will need “long term care” of some kind. This muddled term refers to anything from assisted living, to physical therapy, to nursing homes, and everything in between. Assisted living and nursing homes can cost anywhere from $3,000-$5,500 a month and beyond. It’s a bitter pill to swallow for many aging Americans, but a scenario that needs to be considered as Americans are living longer and the financial burden becomes greater.

How Much Should You Save For Long-Term Care?

Long-term care isn’t something that everyone will need as they age, so preparing for long-term care expenses aren’t a necessity for everyone when planning for their retirement. However, long-term care may be something that you’re worried about being able to afford in the event that it will be needed. If you are considering setting money aside to help pay for long-term care, in the event that it is needed, the amount you plan to save should partly depend on your net worth as you get older. If you have less than a few hundred thousand in assets, you may consider spending down as you retire to eventually qualify for Medicaid (itself notoriously difficult to navigate and, in some cases, substandard in care).

If you’re like most people with a sizeable nest egg but less than enough to outright cover the costs of care, instead, you may want to consider a savings plan. Keeping early retirement expenses at a minimum, saving your social security benefits, and refinancing your home might all make sense as part of your overall retirement strategy. As a general rule of thumb, you’ll probably want to have about 50-75% of your current income to comfortably live through long-term care requirements.

What About Long-Term Care Insurance?

Once a common offering, long-term care insurance has become increasingly hard to find and expensive when available. Still, it remains a decent option for people in specific situations, particularly if you’re able to lock in a policy while you’re still relatively “young.” There are myriad of different plans, too, including life-Insurance with accelerated death benefits, long-term care annuities, and even short-term care insurance. A qualified financial professional can help you determine which of these plans make sense for your retirement strategy, if including Long-term care insurance does make sense, and help you determine how you’ll supplement your income if you live into your 80s, 90s, or beyond.

We all want to age with dignity, and no one sets out to become a burden to their loved ones. Careful planning now can help to give you, and your family, confidence in your retirement strategy as you begin to enter your Golden Years.

Lake Point Advisory Group is experienced in helping retirees and pre-retirees create retirement income strategies and long-term care plans, and we’re ready to help to you, too. Contact us today.

By contacting Lake Point Advisory Group, you may be offered information regarding the purchase of insurance products. All of our financial professionals are licensed insurance agents. Additionally, some individuals may also be registered with a broker/dealer or as an investment adviser. Our financial professionals do not offer estate planning, tax or legal advice. Always consult with a qualified advisor concerning your own situation.

Leave a Comment