Most Americans understand the importance of retirement planning. Whether contributing to a 401(k), tapping Social Security benefits, or drawing a pension, having resources in retirement is critical. However, most Americans miss out on one essential element of planning for their golden years: long-term care. Many seniors find that their retirement savings quickly evaporates without a clear plan for their long-term care needs. Here’s what you need to know.
What is Long-Term Care?
Long-term care describes services someone receives to help them accomplish their activities of daily living or rehabilitation that extends beyond 90 days. Long-term care typically happens at assisted living facilities, in nursing homes, or at home with a caregiver’s help. Many people don’t believe they’ll need long-term care. However, the statistics paint a very different picture. According to the Department of Health and Human Services, “[s]omeone turning age 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years.” On average, women receive long-term care for 3.7 years compared to 2.2 years for men. But 20% of today’s 65-year-olds will need care for more than five years.
While the need for long-term care is high, so is the price. According to Genworth, the median monthly cost of an assisted-living facility is $4,500. Nursing home care is even more expensive, with a semi-private room costing more than $7,900 per month and a private room nearly $10,000. With the average 65-year-old saving $280,000 for retirement, most aging Americans won’t have enough money to pay for care on their own. If you’re approaching retirement age or care for someone who is, you should begin taking a hard look at your long-term care planning.
Questions to Ask
As you begin wrapping your head around the challenges of long-term care, here are a few questions to ask yourself.
Who Will Take Care of Me as I Age?
Often, family members step in to care for their older relatives. But this comes at a steep emotional and financial cost. Family caregivers earn less in their careers than those who don’t provide care, and they also frequently suffer from depression and burnout. If you’d like to spare your family from taking on this burden, you do have other options. Nurses and caregivers provide help with activities of daily living in an assisted-living setting. Skilled nurses and nursing assistants typically care for patients in a nursing home. Many seniors also hire a home health aide or in-home caregiver who can help them live independently in their homes and avoid moving to residential care. So, deciding where you want to live in retirement is the next crucial question.
Where Do I Want to Live as I Get Older?
According to the AARP, “77 percent of adults 50 and older want to remain in their homes for the long term.” This philosophy — called Aging in Place — is popular with people who’d prefer to avoid residential care options. However, aging in place requires lots of careful thought and preparation. People’s needs change as they age. A home that works well for a 55-year-old might not work for someone in their 70s. Home features like single-level living, accessible accommodations, and proximity to essential services are crucial. Older people may have to enter residential care without these considerations because living at home is simply not feasible.
Another option is assisted living. This arrangement allows older people to live in semi-independence with additional services like nursing care, housekeeping, and meal preparation. Assisted living also often provides social outlets for residents in the form of community activities and outings. Assisted living is typically a good option for seniors who benefit from added support but don’t yet have complex medical needs.
Nursing home care is the third long-term care option. These facilities offer a wide range of services for older patients who can’t live independently but don’t require hospitalization. These services often include 24-hour skilled nursing care and physical, speech, and occupational therapy. While each form of care has its pros and cons, patients also pay for them in very different ways.
How Will I Pay for Long-Term Care?
Most retirees rely on Medicare to cover their health expenses. Unfortunately, many older Americans don’t realize that Medicare won’t cover many long-term care expenses. Medicare will pay for costs if your doctor prescribes rehabilitation or other skilled services. However, Medicare will not pay for assisted living and may not cover the cost of a nursing home. That means retirees must pay for these services out of their retirement savings, which could quickly eat away at the balance leaving little to pass along to the next generation.
When older people can’t afford to pay for long-term care costs out of pocket, they turn to Medicaid. Unlike Medicare, individual states administer their Medicaid programs, and applicants must meet income and asset requirements to qualify. Today those limits are $8,400 for individuals and $12,600 for couples. Those low limits are why many older Americans must spend down or give away their retirement savings before transitioning to Medicare.
In addition to tapping Medicare or Medicaid, some older people pay for services with long-term care insurance policies. However, these policies are expensive. A 55-year-old couple could spend $5,000 per year to cover services not provided by regular health insurance. This coverage also doesn’t last forever, as most policies cap benefits at between one and five years.
Another strategy for paying long-term care costs is a life insurance settlement. Some third-party companies will buy a life insurance policy for less than the insurance payout and collect the total amount after the policy owner passes. This approach could offer some seniors a much-needed cash infusion to cover hefty long-term care bills.
When Will You Begin Planning?
Most experts recommend paying for long-term care using a combination of methods. That’s why it’s critical to begin planning for long-term care as early as possible — ideally in your late 40s or early 50s. A qualified financial planner can help you assess your current assets and future needs while creating a plan you can follow that will establish a financial safety net for you and your family.
The Benefits of In-Home Care
After investigating all your options, you’ll probably discover that in-home care is a fantastic long-term care solution. It’s typically much less expensive than assisted living or a nursing home. In-home care also makes it easier for seniors to stay in their homes for longer because caregivers help them accomplish activities of daily living. Most importantly, seniors enjoy a much higher quality of life when they have a dedicated professional helping them thrive through their golden years. If you live in Arizona and want to learn more about the benefits of in-home caregiving, contact Generations Home Care today.
About Generations Home Care
Generations Home Care personalized in-home care and support services help those recovering from illness, injury, or surgery, living with a chronic disease, or dealing with the natural process of aging. We help people live a fuller, healthier, and independent life.
Our caregivers are trained in the Centers for Disease Control (CDC) recommended COVID-19 safety precautions. We offer levels of care ranging from companionship, to respite for the primary family caregiver, to homemaking services, to assistance with activities of daily living, to Alzheimer’s and dementia care. Generations Home Care takes a holistic approach and emphasizes a consistent, client-centered plan of care.
Our Specialty Services Include:
- Rehab or hospital-to-home programs for safe discharge.
- Short-term post-operative care during recovery periods.
- Non-medical life management services for people with chronic conditions.
- Veteran’s connection to care program.
- Live-in services and couples care.
If you’d like to learn more about how we can help you, contact us today at 602-595-HOME (4663) or by filling out the contact form on our website.