You’ve worked hard, saved and built a nice nest egg for your retirement. You were careful with your investments and didn’t invest in anything too risky. You think you’re home free and can enjoy a comfortable retirement. But there’s one risk out there that still must be attended to or it can destroy all your work. It could amount to half a million or more in expenses.
What is it? It is the cost of long term care.
Medicare won’t cover it. Nor, will your Medicare Supplement or Medicare Advantage plan. The only way this bill is paid from savings (your retirement plan!), depending on family to be your caregivers, Medicaid (when your savings are gone) or by transferring the risk to a long term care insurance plan.
Genworth found in a survey of 1,200 people that not having enough money to pay for healthcare or long term care is the greatest fear older adults have about aging. Despite these overwhelming apprehensions only 20 percent of Americans have taken any steps towards figuring out how to finance or actually financing long-term care costs, according to Forbes.
Part of the problem is that Americans are uneducated about long term care. Unless a family member or close friend’s family member needed this care, most people are unaware of the type of care involved or of how costly this care can be. If they knew, I believe they would take steps to make sure this risk is provided for in their retirement years.
In addition, many people are in denial about their need for care. Yet, according to the U.S. Department of Health and Human Services, there is a 70 percent chance of someone over age 65 of needing long term care. As a result, many people are rudely surprised when a health event happens that leads to the need for custodial care. They discover their health insurance won’t cover this type of care and the cost of a home health aid is $25/hour. Or that an assisted living facility is $6,700/month or more and a nursing home is between $10,000 and $11,000 per month, according to Genworth Financial.
Before you let this happen to yourself or your employees, let’s look at some proactive things you can do. Understanding the costs is a good first step, followed by a conversation with a financial professional about potential funding options that will protect assets against long-term care costs. A long term care specialist can discuss the likelihood of needing care, the cost of care today and when you will need care in the future, options for paying for this care and types of long term care policies. They can also help design a plan to fit your budget.
Another good idea is to email information to your employees or invite a long term care specialist in for a short seminar. Caregiving employees conservatively cost U.S. employers an additional $13.4 billion per year. Employers want to protect their company’s productivity and at the same time help their employees prepare for the future. Long term care insurance can do both and is increasingly a key part of the benefit package. Endorsed by the employer, employees are eager to learn more and attend educational sessions, reported by A.M. Best Company.
The Meadowlands Chamber now has a program where employers can refer employees involved in caregiving to get valuable information and resources. Please contact Patti Goldfarb at (201) 255-6239 for details and to see if you company is eligible for worksite long term care discounts.
The bottom line here is that with both high risk and devastating consequences everybody ought to carefully consider their options. Don’t let your retirement be ruined because you didn’t want to know about the possibility of needing long term care or by not knowing what to do about it.