A recent AARP study highlighted the importance of proper long-term care planning. The report tells the story of how fewer family caregivers will be available to care for older relatives in the future. The current ratio of seven to one will decline to three to one by 2050.
This means that fewer individuals can depend on family members to provide care. Many do not have a true appreciation of the costs for long-term care. A semi-private room in a nursing home can average $85,000 per year. Even when full-time care is not required, an assisted living apartment in a nice complex can quickly deplete retirement savings.
Often individuals believe that Medicare or Medicaid will pay for all the costs associated with long-term care. Medicare pays for some costs, and Medicaid only kicks in when you have few assets left. Long-term care can deplete an estate and may even mean that savings from hard work over the years do not pass to children or other heirs.
As more people live into their 80s and 90s, the need for long-term care increases. For instance, the chance of developing Alzheimer’s increases with advanced age. It may not come as a surprise, but Alzheimer’s is the leading reason for needing long-term care services. More and more elder living facilities are expanding their memory loss units as a result.
Men and women have different average life expectancies, which is another important factor in planning. Some long-term care insurers have even started to introduce gender-specific policy rates.
Thinking about long-term care planning in the 50s or 60s often means better access to long-term care insurance and enough time to catch up on any savings shortfall. Having a discussion with an experienced elder care attorney gets the process started and ensures you are prepared.
Source: Forbes, "Changing Family Caregiver Dynamics Ramp Up The Importance Of Long-Term Care Planning," Jamie Hopkins, July 28, 2014.