Crisis In Long-Term Care
Long-Term Care (LTC) is private insurance that covers the costs of skilled nursing care, extended care situations, home health care or stay in skilled care facilities that government benefits do not cover.
Many are surprised to learn the limitations of government benefits when they are actually explored by those that are getting into their senior years and looking to explore turning on Medicare and its various parts.
Aside from housing, medical expenses can and often are the largest expenses that people face in their senior years. For some, they have adequate levels of assets but this is becoming a rarity rather than the norm. AARP reports that the average stay in a nursing home is $116,654 a year and $60,569 a year for home health care. Assisted living care is $63,336 a year. These expenses can eat a nest-egg faster than most are prepared for. $400,000 saved could be gone in 3 to 5 years leaving financial burdens on family or having to pivot to familial care which is its own burden.
Unfortunately, most do not plan for this until late in life or when it is too late. On top of that, most advisors do not prioritize this type of plan when working with clients. There are probably a dozen reasons for this but I want to call people to look at this earlier rather than later - because later could be quite expensive or not even an option for you.
Why do I believe this is critical to include early in your financial planning?
As of today, 70% of people that make it to age 65 will be in a Long-Term Care situation. There aren’t many bets you can make that have a 70% probability of happening. That percentage will only increase in likelihood as we continue to increase life expectancy.
LTC plans are designed to cover LTC expenses better than other financial tools, like retirement accounts or home equity. These preserve other assets, have tax benefits, and come in a variety of shapes and sizes that create a well-rounded financial plan.
Since most people have not given thought to this and that most financial advisors leave this out of their early planning with clients, this is why I believe it to be the greatest asset that you probably do not have in your financial plan since you are likely going to need it. It may be like showing up to a construction site and choosing not to bring a hammer.
Feel free to reach out if you have questions about how LTC works, the types of plans available to people and why this is a critical piece to your financial toolbox.
Coming soon! November is Long-Term Care Awareness Month
As always, if you come across a financially related article you’d like to send my way please do!
Best place to send them is to me.
More next time!
Jonathan