At TenBridge Partners, we put long-term care into every person’s financial plan. 7 in 10 people turning sixty-five this year will need some type of long-term care at some point in their life (Benz; Johnson). However, if you prepare for long-term care, especially from an early age, you will have influence over the type of care you receive, where you receive it, and by whom. In all cases, it makes the most sense to be proactive about planning.
Long-term care services are primarily concerned with helping you meet your basic personal needs, also called Activities of Daily Living (ADLs) such as: bathing, dressing, toileting, transferring, incontinence, and eating (“How Much Care Will You Need?”). Most often, when people need long-term care, they will need assistance with at least a few of these ADLs at a time.
Most long-term care services are provided at home, by unpaid caregivers, and needed for 1-2 years (Stark; Benz; “How Much Care Will You Need?”). Statistically, 65% of people use care services at home for an average of 2 years and 75% of people will need care between one to two years (Stark). Unpaid caregivers typically consist of a spouse, family member, or friend helping to meet your ADL’s. Paid caregivers are people such as a nurse, home health aide, and/or home care aide (“How Much Care Will You Need?”).
While most people receive unpaid care, one in four people aged 65 today will have over $50,000 in out-of-pocket long-term care expenses and one in ten will have over $250,000 in out-of-pocket long-term care expenses (Stark). When paying for long-term care, it can get expensive quickly.
For example, the median annual cost of a home health aide is $54,912 if the aid works 44 hours a week, 52 weeks a year (Benz). Some people may need 24/7 care and as a result, home healthcare rapidly becomes even more expensive. While most people want to stay in their homes, unless the cost and coordination of care is properly planned for, moving into an assisted-living facility or a nursing home can be the only option. Assisted living facilities have a median cost of $51,600 and nursing homes have a median cost of $85,000 (Benz; Stark). While both these facility options are as expensive or even more expensive as receiving care in your home, moving out opens the opportunity for your home to be sold and the proceeds to be used for your care.
Most people who save diligently will be able to afford to pay for care out-of-pocket. Though, it is important to complete a financial plan, so you know for sure. Another option is to purchase a long-term care insurance policy which will pay a benefit when you need care services. These policies can be an excellent way to plan for care by essentially paying for it while you are working and have higher income, rather than paying for it out of your retirement savings later in life. Lastly, talking with your spouse, family members, or friends about your long-term care is essential when putting together a care plan, especially if you plan to have their help as a caregiver, trustee, or an executor.
One of the best things you can do to plan for long-term care, is by trying to avoid it altogether. I bet you are thinking, “easier said than done.” Often, the need for long-term care arises after a fall. By preparing for “aging in place”, you can delay your need for care (“Planning Ahead after Age 65”). It’s important to consider the current condition of your home and if changes can be made to accommodate your needs as you age. Also consider your surrounding community and if there are services you can use such as public transportation, home delivered meals, stores, and shops nearby. To learn more about preparing for aging-in-place, reference this article: Aging In Place: An Essential Component of Retirement Planning.
In sum, long-term care is something every person should be preparing for. Planning for long-term care is more than just knowing you can pay for it. It is also about having a conversation with your loved ones, preparing your home, and preparing yourself for when the day comes. Planning for long-term care ensures you have a voice about your care and should give you greater peace of mind.
At TenBridge, we discuss long-term care with every client and add it into their financial plan. We also offer to host family meetings to discuss topics such as long-term care and estate planning. We know these topics can be difficult to discuss, but we also know it is extremely important to plan for. We are here to help you through it all so you can live your retired years in confidence and comfort.
From the Desk of Sirra Anderson-Crum FPQP®
Benz, Christine. “100 Must-Know Statistics about Long-Term Care: Pandemic Edition.” Morningstar Investing Specialists, Morningstar, 8 Dec. 2020, https://www.morningstar.com/articles/1013929/100-must-know-statistics-about-long-term-care-pandemic-edition.
“How Much Care Will You Need?” How Much Care Will You Need? | ACL Administration for Community Living, LongTermCare.gov, 18 Feb. 2020, https://acl.gov/ltc/basic-needs/how-much-care-will-you-need.
Johnson, Joel. “Long-Term Care Insurance and the Importance of Developing a Plan.” Forbes Personal Finance, Forbes Magazine, 12 Jan. 2018, https://www.forbes.com/sites/joeljohnson/2018/01/12/long-term-care-insurance-and-the-importance-of-developing-a-plan/?sh=47901525479d.
“Planning Ahead after Age 65.” Planning Ahead After Age 65 | ACL Administration for Community Living, LongTermCare.gov, 18 Feb. 2020, https://acl.gov/ltc/basic-needs/pathfinder/planning-ahead-after-age-65.
Stark, Ellen. “5 Facts You Should Know about Long-Term Care Insurance.” AARP Family Caregiving Financial and Legal, AARP, 1 Mar. 2018, https://www.aarp.org/caregiving/financial-legal/info-2018/long-term-care-insurance-fd.html.