It is estimated that 7 out of 10 Americans will need some type of long-term care (LTC) in their lifetime. With this information in mind, it is important to begin discussing your retirement plans, especially as prices continue to rise throughout our country. 

It can be difficult to determine how much care is really needed as you begin planning. According to the U.S. Department of Health and Human Services (HHS), the average amount of time needed in long-term care is 3 years. It’s estimated that a third of today’s 65 year-olds will not need care, while 20% will need long-term care for more than five years. It’s important to not let the statistics scare you, but instead help you as you begin developing your potential plans for the future.

Before you can plot your ideas, you first need to understand how much care could possibly cost you. According to Genworth, a LTC insurance provider, the average fee for a home health aide is $54,912 per year. If you were to choose to go to a high-end private nursing home, you could be looking at an average of $105,850 per year. 

For women, the average time in long-term care is 3.7 years. This means that a woman who requires this term of care is looking between $203,000 to $391,000. Unfortunately, the average 401(k) balance of a 60 year old is $182,000, so it is definitely necessary to begin planning for care early just in case you may need additional assistance. 

In order to protect yourself, it may be necessary to purchase long-term care insurance. This type of insurance makes the most sense when your net worth falls between $200,000 and $2 million. If your assets are less than $200,000 (current figures), Medicaid would quickly kick in to cover costs of care once your assets are depleted. In other words, long-term care would not be financially viable for you. 

If you have assets that exceed $2 million, you may want to forgo the cost of premium and pay for the services yourself. However, if your assets fall in between this range, it is recommended to purchase insurance in order to protect your finances.

Prior to purchasing long-term care insurance, also consider your current family situation. Do you have someone that could care for you or live with you in your time of need? In 2015, AARP shared that over 34 million Americans reported providing unpaid care to a loved one who was over 50 years old. By seeking out family that could help you, this could offer financial security for you and your loved ones by reducing the cost of outside assistance. 

Another popular option individuals choose as they begin planning is having life insurance with a long-term care rider. Due to long-term care prices rising, it may be beneficial to add a rider so you can access benefits. Essentially, this rider allows you to use part or all of the policy’s death benefit for long-term care expenses while you are alive. 

Lastly, you can always choose to self-insure. This is technically the cheapest and most flexible option for you. For example, you may pay a high premium for insurance but not ever need the insurance.  If you have a net worth of $2 million or more, you may want to opt to self-insure. Unfortunately, a majority of people self-insure due to lack of planning. To avoid this mistake, take the time to begin planning your future. 

If you have questions on which option is right for you, be sure to discuss your specific situation with your financial advisor. If you don’t have someone currently and would like a referral to someone I know and trust, reach out to me at or 310-534-5577.

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