Have you thought about what would happen if you or a loved one needed long-term care? I know, It’s not the most comfortable dinner conversation.
But it’s a topic that needs to be addressed eventually.
A recent report highlights something that should catch your attention: over 57% of Americans turning 65 will develop a disability serious enough to require long-term care.
That’s more than half of us. And the costs?
They’re sobering.
The Financial Reality
The average cost for long-term care for someone who is 65 today stands at around $122,400.
But that’s just an average. For some, the total can soar into hundreds of thousands of dollars, which is an amount that’s just not accessible for many Americans.
Let’s break down what this looks like in practical terms:
A typical home health aide costs around $6,300 monthly.
A private room in a nursing home averages $9,700 per month.
These aren’t small numbers, and they vary significantly depending on where you live and what services you need.
The Planning Gap
What is concerning is the disconnect between awareness and preparation. A recent survey found that 73% of workers believe they might need to provide long-term care for an adult in the future. But only 29% of these potential caregivers had estimated what this care might cost.
Even more concerning? Of those who did estimate, 37% believed the costs would remain below $25,000 annually, which is far less than the reality for many families.
What About Medicare and Medicaid?
Here’s where many clients get confused. Typically, health insurance doesn’t cover long-term care services, and Medicare often doesn’t address most costs associated with it.
Medicare may provide partial coverage for “skilled” care during the initial 100 days. This might apply when someone needs nursing support for rehabilitation or medication management. But the custodial care-help with daily activities like bathing, dressing, or eating-isn’t covered by Medicare.
And these fundamental daily tasks make up the bulk of long-term care requirements.
Medicaid currently serves as the primary source for long-term care financing, but qualifying often means depleting a significant portion of your financial resources first. The reality is that in order to qualify, you’d essentially have to be destitute.
Insurance Options
Only about 7 million Americans have some form of long-term care insurance. Considering that over 4 million baby boomers are projected to retire each year from 2024 to 2027, that’s a significant gap.
If you’re considering insurance, consider looking at hybrid policies that merge life insurance with long-term care benefits, as traditional standalone policies focused solely on long-term care tend to be costly.
When looking at policies, pay attention to the benefit payout structure. “Indemnity” policies typically allow insurers to issue benefit checks as soon as you qualify for support, and you can use the funds as you choose.
These offer more flexibility than “reimbursement” policies, which require selecting from approved providers and submitting receipts.
Final Thoughts
One of the most common—and costly—mistakes I see families make is avoiding the conversation about long-term care needs until a crisis hits. As a Financial Planner, I can’t stress enough how important it is to address these issues early and openly with your loved ones.
Waiting until the need arises usually leads to forced or rushed decisions, emotional stress, and significantly higher expenses that could have been managed with some preparation.
Proactive long-term care planning isn’t just about protecting assets—it’s about preserving your family’s peace of mind and legacy. Have that conversation about potential care needs early so you can evaluate your options, including insurance products, savings strategies, or even government benefits.
Ultimately, the goal is to transform long-term care from an overwhelming “elephant in the room” into a manageable part of your financial roadmap. The sooner you start this conversation and planning process, the more options you’ll have—and the better positioned you’ll be to protect your financial future and your family’s well-being.
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