Retirement and 401k News

Will Your Retirement Income Stand Up to the Rising Cost of Long-Term Care?

Will Your Retirement Income Stand Up to

November 22, 2019 –  Forbes


In 1983, President Ronald Reagan designated November as National Alzheimer’s Awareness Month. According to the Alzheimer’s Association, at that time there were less than two million people with the disease. That number has grown to over five million today, making Alzheimer’s the sixth leading cause of death in the United States. Not coincidentally, November is also National Long-Term Care Awareness Month.

While these numbers represent a growing concern for America’s seniors and their adult children, many of whom will share financial and caregiving responsibilities for aging parents, Alzheimer’s is just one factor in the looming long-term care crisis. In fact, every day until 2030, 10,000 baby boomers will turn 65 and 7 out of 10 are expected to require long-term care.

According to the U.S. Bureau of Labor Statistics, healthcare represents the fourth-highest expenditure for Americans between the ages of 65 and 74, following housing, transportation, and food. However, healthcare moves into second place for people aged 75 and older.

As life expectancies continue to rise, your retirement savings will need to last for a longer period of time—even if you enjoy good health. And the longer you live, the more likely you will require long-term care. In fact, according to the U.S. Department of Health and Human Services (HHS), half of Americans turning 65 today will develop a disability serious enough to require long-term support. Although most will need assistance for less than two years, about one in seven adults will have a disability for more than five years. HHS also estimates that adults requiring care will incur $138,000 in future long-term care costs, on average, and that families will be responsible for paying about half of those costs out of pocket, with the rest covered by public programs and private insurance.


However, based on my experience working with clients and their families, these are conservative estimates. The 2019 Genworth Cost of Care Survey illustrates how quickly long-term care expenses can add up, with the average annual cost for assisted living at just over $48,000, home health aides at more than $52,000 a year, and private nursing home care costs topping $100,000 a year. It’s important to emphasize that these are average costs. Actual costs vary widely from state to state. For example, while the median cost for a private room in a nursing home in the United States is $102,200, the same room in Alaska averages $362,268 a year—more than three times the national average.


Keep in mind, Medicare does not cover long-term care. As a result, these costs can have a significant impact on individuals and couples in retirement, and often, adult children struggling to help offset costs while saving for their own retirement. In many cases, long-term care insurance products can help protect against the high costs of these services.

Long-term care insurance is designed to provide coverage if you become chronically ill and may be an option for qualifying individuals and couples seeking to transfer a portion of the financial risk associated with these costs. Depending on the policy, provisions, and options selected, these products may cover a percentage of services such as home healthcare, assisted living and custodial nursing care that can help with eating, bathing, and dressing. Certain policies may also cover care for degenerative conditions and cognitive disorders such as Alzheimer’s.

However, long-term care insurance is not a solution for everyone. Policies can differ greatly from one provider to the next and it’s important to read all policy provisions carefully, prior to purchase, to learn about any exclusions, limitations and waiting periods. It’s also important to compare benefits and providers before deciding whether long-term care insurance is right for you. Since your age, current health, pre-existing medical conditions, and family medical history all play a role in determining annual coverage premiums, the best time to investigate long-term care insurance is when you’re in good health and less likely to be turned down for coverage.

Before considering long-term care insurance, take the time to meet with a financial advisor who serves clients in a fiduciary capacity and takes a holistic approach to planning. A comprehensive approach that considers your family’s unique needs and goals is essential for evaluating how key retirement risk factors, such as longevity, rising healthcare costs or the need for long-term care may impact your ability to pursue the lifestyle you desire throughout retirement. Your advisor can help you evaluate various options for paying for healthcare costs in retirement and recommend strategies that may include a combination of insurance and investment products that may offset the limitations found in many long-term care insurance policies.

Whether you’re concerned about how you will pay for rising healthcare costs over 20 or more years in retirement, or you’re struggling to afford the cost of caring for a parent or loved one, it pays to plan.

For more information on Alzheimer’s, including family resources and support, and ways you can get involved in the fight to end Alzheimer’s, visit


This article was written by Ron Carson from Forbes and was legally licensed by AdvisorStream through the NewsCred publisher network.

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