When it comes to the need for long-term care in retirement, most Americans have a huge blind spot. According to a study conducted by the National Council on Aging and the Leading Age LTSS Center @ UMass Boston, 80% of adults over age 60 do not have the financial resources to cover the out-of-pocket cost of non-medical Long-Term Care (LTC). Meanwhile, research indicates someone turning 65 today has a nearly 70% chance of needing some type of LTC services in the future.
Add to this, as the U.S. population ages, the cost of custodial care services is rising. In fact, according to an article published on the Skilled Nursing Care website, “Inflation and the shortage of skilled care workers were the main drivers of increases in the rising costs of long-term care services in 2023, with skilled nursing rooms posting the highest increase.”
Who Pays For Long-Term Care In A Nursing Home?
The short answer: you pay for it. Many federal retirees wrongly assume FEHB or Medicare will cover long-term care services in a nursing home. This misconception likely arises from the fact that your primary insurance usually covers approved medical needs in a nursing home. However, FEHB and Medicare will not cover the cost of non-medical, long-term custodial services. And, depending on where you live, the average private room in a nursing home can cost as much as $10,000 per month. Without long-term care (LTC) insurance, you may have to tap into your Thrift Savings Plan (TSP) nest egg or home equity to cover the expense.
It’s All About Your Longevity
You might think you won’t live long enough to need long-term care, and you’re not alone. When people age 65 were asked to estimate their probability of living to age 80, only 58% of men and 64% of women believed they would. In reality, at age 65, a man has a 66% chance of living until 80 while a woman has a 75% chance of hitting the big 8-0. And when you live to age 69, your chance of living until 80 increases a few points.
Can You Afford The Cost Of LTC If You Need It?
Ignoring the probability you may need long-term care in the future is a mistake that can derail your retirement if you’re unprepared for the cost. The need for long-term care can hit at any age if a heart attack, stroke, or accident leaves you incapacitated. Are you prepared to cover the cost?
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