It's estimated that about 70% of people 65 and over will require 3 years of long-term care support. During my years as an executive director in senior living, I dealt with many family members and elders in difficult circumstances because of financial constraints:
- elders required to move out of their assisted living home because they ran out of money
- elders forced to live in substandard, low income nursing homes funded by Medicaid
- families whose personal finances were drastically impacted by the long-term care needs of a loved one
The only long-term care Medicare covers is primarily short rehabilitative stays in skilled nursing settings and some home health support, usually after a hospitalization, with a maximum of about three months. The other federally funded long-term care program, Medicaid, is designed for those in financial need who require skilled nursing care, and once qualified, coverage is indefinite but choices and options are limited. There is no federally funded coverage for assisted living facilities, a more homelike, less costly long-term care option that is primarily paid for with private funds. The average cost to live in an assisted living facility is $3,550 per month.
A recent Congressional Budget Office (CBO) report highlights that more than half of informal long-term care support, usually in an elder's own home or the home of a loved one, is donated by adult children or spouse in the form of imposed costs such as substantial free time (one report estimate an average of 47 hours a week), effort, lost wages and other expenses. The CBO estimates the annual value of that informal care, compared to the cost of paid home health providers at $20 per hour, at $234 billion.
According to a research brief prepared for the Department of Health and Human Services, people 65 and over will require an average of 3 years of long-term care services. To cover the cost, the brief recommends each person 65 and over have at least $50,000 invested to conservatively cover the cost of their eventual long-term care costs.
With the dramatic growth in the number of seniors in the United States (by the year 2030, 25% of adults will be over age 65), now is the time to start thinking about how to finance future long-term care for ourselves and our loved ones. Planning, investing, saving, and looking at options like long-term care insurance are some considerations.
I highly recommend everyone near retirement age talk to their financial planner about how to preserve retirement savings by planning ahead for the costs of long-term care. Contact me if you would like to discuss how we can analyze and strategize your personal circumstances, long-term care options, and the value of tactics like long-term care insurance.