Across the United States only 22 percent of folks over 65 believe they will be required to stay in a long-term care facility. However, the national statistics show otherwise. A whopping 70 percent of all Americans will spend time in a long-term care facility.
What is the result when two tsunamis collide? I’ll call one tsunami the catastrophe of 70 percent of all retirees needing some amount of long-term care. The second tsunami is that the average person reaching age 65 today has less than $60,000 of total assets to their name! When you combine these two you’ve got a serious catastrophe looming. To compound this problem, if one spouse has to have long-term services and uses all the assets and then dies, the surviving spouse will be forced to go on welfare, or be totally dependent on family.
Why is the need for long-term care so devastating? The cost! Average providers charge $3,200 a month and in some areas of the country, there are only $5,000-a-month facilities available. Calculating these costs predicts a $36,000 to $60,000 annual cost for 70 percent of people age 65 and older, with most needing care for three years. Because most people reaching retirement age today have only $60,000 to their name, you can see the dilemma.
So what can you do? Good solutions are very few. I offer some options here from my own experience of 45 years.
- I have seen some people set up a reverse mortgage on their home. This stops the debt payments and may allow them to pull money out to use for long-term care.
- If you are in your 50s, long-term care insurance can be somewhat affordable and may be worth looking into. Once you reach your 60s, forget it. The premiums become too high to justify.
- Many people are forced to use their Social Security income through Medicare for long-term care, but the facilities that accept Medicare are often poor quality and may already be full.
- Some life insurance companies have been creative and added long-term care riders to annuities and life insurance policies, but this has not yet caught on in a major way. It may be worth your time to investigate insurance companies that offer such riders.
If you have been thinking that you need to do a better job saving for retirement, now is the time to really step things up. Begin looking at adjusting the way you spend your income, the way you take debt for granted, and the need you may have to get creative in your working years to figure out ways you can fund your retirement more efficiently so you can save for long-term care needs, because 3 out of every 4 people will need it. Will you be one of them?
We plan well for other risks and catastrophes, but we don’t often think about planning for poor health in old age. How does the risk of long-term care compare to other risks we insure against? Take at a look:
When you understand that three-fourths of all Americans will need some form of care you will see that now is the time to take action, before it’s too late. Stop assuming you won’t be one of them. It is more than likely that you will. You will find the need to adjust the way you are spending your income, the way you take debt for granted, and the lack of any long-term savings plan. Get help before you are sitting on a cold park bench drinking soup from a tin can.
For some great options for funding retirement and ensuring against old-age poverty, contact me directly: firstname.lastname@example.org, (801) 292-1099.