AS BABY BOOMERS and Generation X march toward retirement, they face a daunting issue: What steps should they take, given the risk they’ll require long-term care?
Long-term care—defined as needing help with activities of daily living such as bathing, dressing and eating—is something that almost 70% of retirees will require at some point, according to LongTermCare.gov. Problem is, Medicare only provides limited coverage.Yes, Medicaid does cover long-term care. But it was designed as a last resort for low-income folks. To qualify, your assets must be virtually exhausted.
That could leave your spouse living in poverty, plus it eliminates the chance of bequeathing significant sums to your family or favorite cause. And even then, if Medicaid is paying, your care options will likely be limited. The upshot: Because of the high likelihood of needing care and the limited government assistance available, preparing for possible long-term-care costs should be on the agenda for all of us. Based on Genworth Financial’s 2019 Cost of Care survey, it costs an average $4,385 per month in the U.S. for a fulltime home health aide and $8,517 per month for a private room in a nursing home.
According to a 2016 study by the Department of Health and Human Resources, one out of six retirees will spend at least $100,000 out of pocket for long-term care. In extreme cases, where someone is diagnosed with dementia, 24-hour care could be required for many years. Because of this risk, many people turn to insurance. But before doing that, take five steps:
1. Get a handle on costs. Depending on where you plan to retire, the cost of care can differ sharply. For example, a private room in a nursing home costs $12,745 per month in Seattle, but only $8,669 in Atlanta.
To get a sense for the bill you might face, try Genworth’s Cost of Care calculator. Get the cost of a fulltime home health aide, assisted living facility and private room in a nursing home in your area. For example, in Richmond, Virginia, those costs are $4,576, $4,848, and $9,292 per month, respectively. These benchmarks are a good starting point for planning.
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Source: Don’t Ignore It – HumbleDollar