November is long-term care awareness month. If you didn’t know that, or if this is the first you’ve heard of long-term care insurance at all, don’t be surprised. It’s a relatively new type of coverage, brought about by a relatively recent demand. People are living longer, a fact which raises new questions – and new answers.
Fact: long-term care needs to be part of your retirement plan.
Usually, when people think about planning for retirement, they think about saving. And so they should. Saving – as much and as early as possible – is crucial to a comfortable retirement. So is long-term care planning. Here’s why:
1. Most people will need long-term care at some point. Seventy percent of people who are 65 or older are going to need some type of long-term care, at some point in their lives – almost three out of four.
2. And it’s not cheap. In the U.S., the median cost of nursing home care with a private room is $87,600 a year. That number is only going to grow over the next decade. Use the Genworth Cost of Care Survey to estimate the cost of care in your state when you’re 80 years old. For example, in California, in 20 years (2034) a private nursing care room is projected to cost $187,881! Especially for people with lower incomes, that’s a hard pill to swallow. Perhaps that’s why 78 percent of those who need long-term care today are receiving it from family and friends.
Of course it’s wonderful to have a supportive family. However, on the flip side, caring for an older relative can be a really difficult burden. By making long-term care part of your retirement plans, you’re not only taking care of yourself; you’re protecting your loved ones. No less importantly, you’re also making sure you’ve got a say in how your future looks.
3. Planning for long-term care means choosing for yourself. When people arrive at the point of needing long-term care with no plans and no coverage, they generally don’t have much of a say over what shape that takes. At that point, the type of care you get, from whom, in what setting, is largely determined by the costs involved. On the other hand, those who plan ahead get to make their own choices about their lifestyle, and decide for themselves what type of care they want. Home care, assisted living, retirement communities, nursing homes – there are multiple options to choose from. Most people are surprised to learn that a great deal of long-term care is provided in the comfort of one’s own home.
4. The younger you are when you start planning, the easier it is. Just like saving for retirement, the sooner you buy long-term care coverage, the more manageable it is. If you wait until after age 70 to purchase your long-term care insurance policy, your monthly premium could be twice as much as it would have been if you had purchased a policy at age 55. Furthermore, there’s underwriting to keep in mind. Generally, long-term care insurance is most available and affordable for those in good health. Don’t wait until you are diagnosed with a critical illness to apply for coverage.