If you or one of your loved ones is turning 65, there’s a 70% chance you will require long-term care in the future. With rising needs and increasing costs, this can put a substantial strain on your finances. But what is long-term care exactly?
Activities of Daily Living (ADLs)
It might surprise you to know that long-term care is not focused solely on medical care. In fact, it centers around helping with these six basic tasks (ADLs): bathing, getting dressed, eating, toileting, continence, and transferring.
Other Common Tasks Addressed
In our later years, some aspects of our everyday routines may become increasingly difficult or unsafe to perform without assistance. From driving to doctor’s appointments and taking medication to grocery shopping and housework, many seniors find themselves relying on others for help.
Considering Caregiver Options
The majority of people will depend on a spouse, family member, or friend to act as an unpaid caregiver. But when they’re unable to meet the level of care you require, what are your options? Additional home support can be provided by home health aides and nurses, while community resources include adult daycare centers and transportation services. For more comprehensive care, skilled nursing facilities and assisted living facilities offer round-the-clock supervision, but that comes with a high price tag.
Preparing For The Cost
A semi-private room in a nursing home averages just shy of $100k per year, while 12 months in an assisted living facility comes in at around $54k. If you opt for in-home health care, you could be paying up to $80k per year. Don’t expect Medicare to cover these expenses; their benefits cover a short period (100 days) of skilled care, and that’s generally when you’re recuperating from a hospital stay.
Other Long-Term Care Insurance (LTCI) Options
If you’re purchasing an LTCI policy (new enrollment in the FLTCIP remains suspended), the younger you are and the better your health, the lower your premiums will be. Since not everyone will require long-term care, explore hybrid insurance options. These policies avoid the “use it or lose it” pitfall by marrying long-term care with permanent life insurance and allowing you to tap into the benefits you need.
Another way to offset the added expense of long-term care is to purchase an annuity with a long-term care rider. Annuities with these riders allow for immediate access to long-term care funds while providing a separate cash fund, with benefits often significantly enhancing monthly payouts if care is needed.
For more information, reach out to a Federal Retirement Consultant (FRC®) who can help you understand your options.
