Not planning for long-term care can put your retirement at risk
Aging Boomers are blazing new trails in retirement, making it hipper and more purposeful than ever before. Ask any Boomer about their retirement priorities, and they’re bound to list financial security, health and independence among the top five. But the truth is most haven’t adequately planned for one of the biggest threats to all three: the need for long-term care.

A real risk
With better health care options and increased awareness about the benefits of a healthy lifestyle, Americans are living longer, fuller lives than ever before. But as life expectancy increases, more seniors are reaching the point where they need help with daily activities or require more extensive care. Studies show that more than 60% of seniors over 65 will need some type of long-term care. This year, that number is expected to be more than nine million Americans. By 2020, it could exceed 12 million.

What kind of care you’ll need and how long you’ll need it can be difficult to predict. On average, someone age 65 today will need some long-term care services for three years. Many times, long-term care begins in the home with family or friends aiding in everyday activities. But as you age or if you become ill, your need for care can increase beyond your family’s ability to provide it on their own.

A changing landscape
An aging population, along with social and cultural shifts over the past half-century, have changed the way long-term care is provided. The biggest changes affect the ability of families to take on the responsibility of caregiving. Today’s economy often requires both husband and wife to be in the workplace. This makes being a primary caregiver for a loved one a difficult and often financially insurmountable challenge.

In the past, there were generally many children in a family, creating a greater chance that at least one could provide care. Today, families are often spread out across the country. When a family member needs long-term care, relocation is often necessary.

The cost of care
Long-term care services are expensive. Based on the 2007 national average, one year of care in a nursing home averages over $66,000 for a semi-private room. One year of care at home, assuming you need periodic help from a home health aide (the average is about three times a week), would cost almost $16,000 a year.

Many people believe their private health insurance, Medicare or Medicaid will cover the cost of long-term care services. In the vast majority of cases, this is untrue. These policies generally cover only brief stays in specific facilities or, in the case of Medicaid, require individuals to spend down nearly all of their assets to qualify for assistance.

Choices in care
As you plan for retirement, you ask yourself questions about how you’d like to maintain your lifestyle, your independence and your health. Similar issues are at stake as you plan for the possibility of long-term care expenses. Like retirement planning, long-term care planning can determine whether you’ll be able to make choices based on your quality of life preferences or based on necessity. Your options for care — including which facilities you consider and whether you can receive care at home — may be severely limited by your family’s ability to pay for care. Planning is crucial.

Plan to pay
Incorporating long-term care into your retirement planning can mean peace of mind and freedom of choice. In general, there are four ways to pay for long-term care:

• You can rely on others (spouse, children, etc.) to provide the help needed. This option assumes that you will have a support system willing and able to provide care.
• You can “self-insure” and pay for your own long-term care with your own assets and income.
• You can spend down all of your assets and then qualify for Medicaid.
• You can purchase long-term care insurance to cover a pre-determined amount of cost.

The majority of Americans rely on one of the first three options to provide them with the care they’ll need later in life. Each requires that they or a loved one bear the bulk of the financial burden for care. For a growing number of Americans, purchasing long-term care insurance is a viable option to help protect their assets and their families.

Long-term care insurance: Factors to consider
Long-term care insurance is generally priced according to your age and health when you purchase the policy. This means that it’s important to consider long-term care insurance well before you will likely need it. Other factors that impact cost include:

• Benefit features
• Waiting periods
• Length of benefits period
• Place of care
• Inflation protection

It’s best to speak to a long-term care insurance expert to help you understand all your options. For more information, request a free copy of the book “Caring is Sharing: Five things you need to know before purchasing Long-term Care Insurance”
at www.ltcguidestone.com.