The Retirement Risk Nobody Wants to Talk About
By: Max Valavanis, CFP
“I’m not going to a nursing home!” This is one of the most common phrases I hear when I meet with seniors. And I understand it. Nobody plans for long-term care, and no one wants to think about needing it. Unfortunately, not having a plan in place can only make you more vulnerable. And the odds are not in your favor.
According to the US Department of Health and Human Services, roughly 70% of adults turning 65 will need some form of long-term care during their lifetime. Additionally, 22% of those people will require it for more than five years. The average woman will need care for 3.7 years, while the average man will require 2.2 years. With our aging population, it is prudent to emphasize the potential effects this has on someone’s finances or legacy.
So, what are the costs? According to CareScout, the national median cost of assisted living is now $74,400 per year. Moreover, nursing home rooms run $114,975 to $129,575 annually. If you plan on paying out of pocket, the expected cost of a 48-month nursing home stay amounts to a shocking $480,000! No, that is not a typo. Most people are not prepared for the intense costs of long-term care.
Here is where most seniors stumble. A recent KFF poll found that four in ten adults incorrectly believe Medicare will cover nursing facility care. Unfortunately, this is not the case. Medicare will insure up to 100 days of skilled nursing care, but only after a qualifying hospital stay, and strictly for rehabilitative care. It does not cover custodial care, such as help with bathing, dressing, and eating. Then, once Medicare stops, you could be on your own.
Shockingly, according to LIMRA, only 3% of all Americans over age 50 carry any form of long-term care. As a result, the other 97% are either planning to self-insure or hoping the problem never arrives. Proper planning for long-term care comes in many different forms. The most common is traditional Long-Term Care Insurance. This type of insurance is increasingly popular as the Baby Boomer generation ages. Likewise, as you age, the cost of the insurance rises. Often, I can find my clients affordable rates because they acted decisively and early.
There are many ways to plan for long-term care. The families who navigate long-term care best are not the ones who were lucky. They’re the ones who had the conversation early. If you’ve never reviewed your long-term care exposure with a financial planner, the conversation is worth having. The best time to have it is while all of your options are still on the table. If this interests you, please give our office a call. We offer free, no-obligation appointments for all readers of the Senior Scene and can meet at our Melbourne or Rockledge offices or via Zoom. You can call ValaVanis Financial at (321) 956-7072.
Securities offered through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC. Advisory services offered through J.W. Cole Advisors, Inc. (JWCA). ValaVanis Financial and JWC/JWCA are unaffiliated entities.