What Type of Long Term Care Should You Plan For?

Updated on Oct 02 2019

Long term care and healthcare costs are a part of growing older, and they can be financially devastating to individuals and families who have not prepared for it. Learn more about why you need to prepare for long term care and get tips for being financially prepared for whatever the future holds.

Why You Need to Prepare for Long Term Care

Experts estimate that two out of every three Americans who are 65 years old and older will need long term care for up to three years at some point in their lives. However, a survey of over 1,000 Americans conducted by the Associated Press and NORC at the University of Chicago revealed that most Americans who are 40 years old or older have done “little or no planning” to handle the financial burden that accompanies long term care.

The study also found that people generally underestimate the cost of nursing home care and believe Medicare will cover more than it actually does. According to the survey, despite the fact that people are worried about memory loss or becoming a burden to adult children, few people are setting aside money to cover care costs.

Essentially, the survey revealed what financial experts have been cautioning for years — Americans are generally misinformed about long term care and ill-prepared to cover the healthcare costs that often come with age. And the costs are substantial. The U.S. Census Bureau estimates that over $215 billion is spent annually on nursing home and residential care. Of that cost, only about two-thirds is covered by Medicare and/or Medicaid while about 25 percent is covered by seniors and their families.

Benefits of Long Term Care Options

There’s little doubt that every American needs to financially prepare for some form of long term care. Long term care can look very different depending on each person’s unique needs. These are some of the most common forms of long term care.

Home Care

This is a type of long term care where the care recipient stays at home but receives care services from a medical professional. This can include wound care, medication management, at-home physical therapy, and other related services.

Assisted Living Communities

This is a type of residential community where seniors have access to around the clock care. Typically apartment-style accommodations allow the residents to have some level of independence while being closely monitored and near care services if needed.

Memory Care Communities

Specifically designed to meet the needs of seniors living with Alzheimer’s or a related form of dementia, memory care communities strive to give seniors with memory loss a safe place to live as dementia progresses. These communities typically have activities and programs aimed to engage people with dementia.

Nursing Homes

Nursing homes are medical facilities where seniors can stay and rehabilitate following an injury, stroke, surgery, or other medical issues. Their accommodations can be private or shared and they receive care services to help them rehabilitate.

4 Ways to Financially Prepare for Long Term Care

Statistics show that each one of us will need some type of long term care. But, how do you plan for an unknown future? What is long term care planning?

Long term care planning involves doing the best you can with the information you have now. It means financially preparing for long term care so that if you do need the care, you have a way to pay for the quality care you want and need. These long term care planning essentials can help you manage care costs through retirement.

1. Make it a family decision.

It can be uncomfortable to talk to friends and family about aging, senior care, and end of life decisions. However, being open and honest about everyone’s needs wants, and expectations can save a lot of time, money, and heartache down the road. If a senior is relying on an adult child to care for him or her, but that child is unwilling or unable to provide care, it is better to know earlier, giving more freedom and flexibility for other care options.

This conversation should also include end of life care and a discussion about the senior’s living will.

2. Consider if long term care insurance is right for you.

Long term care insurance can cover costs associated with senior care, including home care and memory care. Talk to your financial advisor to see if a long term care insurance plan is right for you. Less than 3 percent of Americans have them, largely due to their high price point. If the beneficiary has already been diagnosed with an illness causing long term care (like dementia), this payment option is usually not an option.

3. Visit a continuum care community.

It’s never too early to start looking at a potential new senior community. Visit a few in your area and learn what you like and what you do not like about communities. Be open about your expectations for a community so that you know what you want if you need to move suddenly.

4. Save save save!

Don’t underestimate how much you will need in retirement to cover healthcare expenses. It is estimated that a healthy couple retiring at the age of 65 will spend $285,000 on healthcare expenses in retirement. Save as much as you can while you are working to cover these often unexpected expenses.

Get Expert Advice

There’s no question that healthcare and long term care expenses can financially derail a retirement. Be as prepared for the unexpected as you can be by meeting with a fiduciary financial advisor and discuss how you will pay for long term care if needed. A fiduciary financial advisor is ethically and legally required to act in your best interest and he or she will be able to give you a comprehensive and accurate financial assessment. Contact your trusted financial advisor and be prepared for whatever the future holds.

Originally published at https://www.seniorfinanceadvisor.com.




Your retirement planning resource. We connect individuals, seniors, retirees and families to local investment and financial advisors.

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Senior Finance Advisor

Senior Finance Advisor

Your retirement planning resource. We connect individuals, seniors, retirees and families to local investment and financial advisors. Call today: (888) 346–0211

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