Long-term care
Safeguarding what matters most
Protecting your loved ones and ensuring you have the flexibility to choose care — that's long-term care planning. Live life confidently, knowing that protection is in place should you need care in the future.
What is long-term care?
Long-term care covers a breadth of services designed to help people meet their health care and personal care needs. These services are typically necessary when an individual is unable to perform the basic activities of day-to-day living on his or her own. The need for long-term care may arise after an unforeseen health setback, such as a heart attack, stroke, or injury due to an accident. Or the need for care may develop slowly, over time, due to one or many factors.
The U.S. Treasury reports that half of Americans who live to be 65 or older will require long-term care services at some point in their lives. It’s one more reason why planning for the cost of long-term care is an essential part of retirement planning.
Reasons to plan for your long-term care
As you can imagine, the costs of long-term care services can add up quickly, creating a substantial ongoing expense. Here is what’s included in long-term care plans.
Get quality care quickly
If something happens, having coverage means you'll have funds ready when you need them.
Choose where you get care
From at-home to a good facility, having a long-term care plan in place can help you pay for it.
Safeguard your nest egg
Having a plan for long-term care can help make sure you won't lose a lifetime of savings.
Calculating long-term care costs
According to Long Term Care Group, Inc., a leading industry consulting and management firm, the average cost of a home-care health aide was $78,694 in 2021. It’s a sobering figure, especially when you consider that the 2020 US Census reported the median income of an American family as $64,994.
Predicting the cost of future long-term care is even more sobering. Think of someone who is 40 and healthy today, but could require five years of long-term care forty years from now. Factoring in a 5% annual inflation rate, the price of five years of care could add up to millions of dollars by the time that person is 85.
Types of care include:
Home-based professional care involves hiring medical and other professionals to help an individual in his or her own home. A home health aide currently costs around $27 an hour.
Assisted living facilities allow individuals to live in their own on-site apartments while receiving assistance with daily activities and opportunities for social interaction. Assisted living costs average $4,826 a month, but may vary based on apartment size and amenities.
Nursing home care offers 24/7 on-site care. This is the highest level of long-term care and the most expensive. The national average for a private room is $315 a day. That adds up to nearly $115,000 annually.
Types of care and location impact cost
A major insurer’s cost-of-care study tells us that long-term care costs can vary widely based on geographic location and the type of care provided.
Paying for long-term care
It’s no surprise that paying for long-term care creates significant challenges for many Americans. Planning ahead is the key to avoiding being financially blindsided. Planning ahead not only helps you choose the best options should you ever need long-term care, but it also helps ensure that the cost of care does not overwhelm your retirement.
Options for covering the cost of long-term care include personal assets, like savings and investments. You could also sell other assets to generate the necessary cash flow, but be aware that this approach could also produce a considerable tax bill. Discussing the pros and cons of liquidating assets with your tax and financial advisor before doing so is the best course.
Long-term care insurance is designed to cover long-term care expenses should the need arise. There are various products in the market that can help address the need. We carefully and thoughtfully educate on all solutions.