Long-term care insurance is essential
When planning for the future, having a retirement nest egg is vital. However, relying only on self-insurance may not be efficient as health, and long-term care is costly, and could quickly deplete one’s retirement funds. Health care is a significant expense for retirees; therefore, one should always ensure they are covered for it. An estimate of 70% of seniors will require some level of long-term care in their lifetime. For some, it means a couple of visits from a home health aide, while for others, it may be staying in a nursing home for several years. It is emotionally difficult to think of yourself or your family in such a state, but it is crucial to plan for this eventual expense to ensure that you do not go bankrupt.
Long-term care insurance is essential, as it is not covered by Medicare, which only covers medically related services. According to Genworth, the national average annual cost for assisted living facility is $48,612, for home health aide $52,624, for shared nursing home room is $90,155 and for a private nursing home room is $102,200 (“Median Cost of Nursing Home, Assisted Living, & Home Care | Genworth”, 2020). There are several options to cater to long term care, such as having retirement savings, contributing to a health savings account, and purchasing long term care insurance. Long-term care insurance will take on a large portion of the costs and be invaluable when faced with these expenses. Due to the hefty premium hikes, long-term care insurance is also pricey. In 2020, the annual average premium for a 55-year-old couple is $3,050, while that for a single female aged 55 is $2,650, and a single male $1,700 (Backman, 2020). Funds from a health savings account can come in handy when paying these premiums. Despite the high premiums, long-term care insurance is essential, especially for people with substantial assets, and it is vital to save for it in advance.
References
Backman, M. (2020). The Shocking Cost of Long-Term Care — and How to Tackle It | The Motley Fool. The Motley Fool. Retrieved 3 June 2020, from https://www.fool.com/retirement/2020/01/29/the-shocking-cost-of-long-term-care-and-how-to-tac.aspx.
Median Cost of Nursing Home, Assisted Living, & Home Care | Genworth. Genworth.com. (2020). Retrieved 3 June 2020, from https://www.genworth.com/aging-and-you/finances/cost-of-care/cost-of-care-trends-and-insights.html.