Did you know that 70% of people older than 65 will need some form of long-term care? The big question is, how will you pay for it? In this short Finance Moment podcast episode, Chief Planning Officer Matt Roberts shares information on:
Did you know that 70% of people older than 65 will need some form of long-term care? The big question is, how will you pay for it? Many assume Medicare has them covered, but that’s a costly mistake. According to the U.S. Department of Health and Human Services, the average cost of a private room in a nursing home is over $100,000 per year, and home health aide services can run upwards of $60,000 annually. Those figures can vary widely based on location. Today, in just a few minutes, we’ll break down what long-term care insurance is, why it matters, and how you can plan to protect yourself and your family.
Most people don’t realize that Medicare only covers short-term skilled nursing care after a hospital stay, not long-term custodial care. And while Medicaid does cover long-term care, you’ll need to spend down most of your assets to qualify. In fact, nearly half of all Americans turning 65 today will spend some time in a nursing facility, with women requiring care for an average of 3.7 years and men for 2.2 years. That leaves many retirees paying out of pocket, which can quickly drain a lifetime of savings. That’s where long-term care insurance comes in.
Long-term care insurance helps cover the cost of in-home care, assisted living, and nursing homes. Policies vary, but key factors include the daily benefit amount, the waiting period before benefits kick in, and how long coverage lasts. Most policies will offer inflation protection to keep up with rising care costs. The goal is to help you maintain financial independence and avoid burdening your loved ones. Considering that the average length of a long-term care claim is about three years, having coverage in place can make a significant difference.
So, who should think about long-term care insurance? Generally, the best time to purchase is in your 50s or early 60s, before premiums become too expensive or health issues limit your options. If you have significant assets, an LTC policy can help preserve your wealth. If you’re concerned about high premiums, hybrid policies combining life insurance with long-term care benefits might be a good alternative. With 56% of Americans aged 50 and older worried about affording long-term care, planning is crucial.
The best time to plan for long-term care is before you need it. If you wait until there’s a health concern, your options become limited. A little planning now can go a long way in protecting your financial future and giving your family peace of mind.
At Syverson Strege, we are a fee-only financial planning firm, so we do not sell any insurance products. We welcome the opportunity to discuss how to protect yourself against the financial risk of a long-term care event. If you have any questions, please reach out to one of our financial planners at (515) 225-6000 or contact us online.