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April 12, 2024

How To Prepare For Long-Term Care Costs: Pay For Long-Term Care With Ease

What are your plans for your retirement years? How do you plan to maintain a decent, independent, comfortable, and quality life as you transition into the age where you should enjoy the benefits of your years of working?

One thing is certain. You'll need money; lots of it.


Did you know that among adults aged 50-64, just under three in ten (28%) have set aside money to pay for long-term care? This percentage increases to 48% among adults aged 65 and older. In fact, according to the 2022 KFF survey, most adults in the U.S. do not feel prepared to handle the cost of long-term care [1].


This demographic understands that they need long-term care but hardly ever prepare for it, and most of this is due to not knowing exactly how to prepare.


What is Long-Term Care?

Long-term care refers to a range of services and support designed to assist individuals who have difficulty performing activities of daily living (ADLs) independently due to chronic illness, disability, or cognitive impairment.


Long-term care is typically required over an extended period, often for months or even years. It aims to help you maintain your quality of life and meet your personal care needs when you're no longer able to fully care for yourself.


Long-term care can encompass various types of assistance, including:

  • Personal care
  • Instrumental activities of daily living (IADLs)
  • Skilled nursing care
  • Memory care
  • Rehabilitation services

Long-term care can be delivered in various settings, including:

  • Nursing home care
  • Assisted living facilities
  • At-home care (If you're aging in place)
  • Adult day care centers

Planning and preparing for long-term care needs, including understanding available options, assessing costs, and considering life insurance companies or financial strategies, can help you and your family navigate this important aspect of healthcare and ensure the appropriate level of care and support.


What are the Costs Involved in Long-Term Care?

According to Genworth Financial, the national median cost of a private room in a nursing home has reached $108,405 per year. Meanwhile, the cost of hiring a home health aide can go up to $61,776 annually [2]. 


These expenses can rapidly deplete the average savings of $426,000 that Americans aged 65 and older had accumulated for their entire retirement before the onset of the COVID-19 pandemic.


The amount you'll need to cover long-term care costs depends on your long-term care needs, your current age, the type of long-term care options you want, the additional amenities, and the facility or community.


How Can You Prepare for Long-Term Care Costs With Ease?


Long-term care expenses are essential to enjoy retirement while remaining independent, comfortable, and healthy. 


Preparing for long-term care costs can seem overwhelming, but with a systematic approach, you can navigate the process with ease. Below are some of the best ways to prepare for LTC


1. Educate Yourself

Understand what long-term care entails and the associated costs. Research different types of care, such as nursing homes, assisted living facilities, or in-home care. Learn about the average costs in your area and the services covered by insurance or government programs. Proactively educating yourself will help you put a rock-solid plan in place.


2. Assess Your Finances

Carefully assess your financial situation, as this will help you plan ahead and prepare better. Evaluate your income, savings, and assets. Determine how much you can comfortably allocate towards long-term care expenses. 


3. Explore Life Insurance Options or Hybrid Policies

Long-term care insurance and some annuities can be a valuable tool to cover the costs of long-term care. You can also choose a hybrid option, which is a combination of life and long-term care insurance.


Research different insurance providers, life insurance policies, and coverage for long-term care. Compare premiums, costs and benefits, and waiting periods. Keep in mind that premiums are typically lower if you purchase a policy at a younger age and in good health. Don't wait till you need care. Start now.


4. Create a Budget

Self-funding is expensive and if you'll need to pay for your care needs yourself, make sure you're creating a budget that accounts for potential long-term care expenses. Consider factors such as housing, medical costs, medication, and personal care.


Factor in inflation and anticipate future healthcare cost increases. Cut down on impulse expenses that can make it difficult when you need to pay for long-term care services.


5. Save Strategically

Building a dedicated savings fund for long-term care can provide financial security. Explore tax-advantaged savings options like Health Savings Accounts (HSAs) or Individual Retirement Accounts (IRAs) that offer potential long-term care benefits. Contribute regularly to these accounts to accumulate funds specifically earmarked for future care.


6. Consider Medicare and Medicaid Planning

Medicaid may be an option if you have limited resources. Research your state's Medicaid eligibility requirements for long-term care coverage. Consult with an elder law attorney who can guide you through the application process and help you develop a strategy to protect your assets while qualifying for Medicaid-funded care.


7. Plan for Home Modifications

If aging in place is your goal, assess your home for necessary modifications to ensure safety and accessibility. Estimate the costs of adaptations such as grab bars, ramps, or bathroom modifications. Include these expenses in your financial plan and explore community resources or grants that may help cover some of the costs.


8. Communicate with Family Members and Loved Ones

Discuss your long-term care plans and financial preparations with your family and loved ones. Involve them in the decision-making process to ensure everyone is on the same page. Share important documents, such as wills, powers of attorney, and healthcare directives, to ensure your wishes are known and can be carried out.


Remember, preparing for long-term care costs is a proactive and compassionate step towards your future well-being. By educating yourself, assessing your finances, exploring traditional long-term care insurance options, and other options for funding long-term care, you can approach long-term care preparations with ease and peace of mind.


Why is it Important to Prepare for The Cost of Long-Term Care?


The most important reason you should start preparing for long-term care costs now is that you'll need a lot of money to live the comfortable and independent life you want as you age. This becomes even more important due to the continuously soaring costs of senior care in the U.S. and other parts of the world, which, in itself, is unfortunate [3].


The reality is that there is no protection for this time of life unless you actively and proactively plan for it. Another "not-very-friendly" option is to go bankrupt and have Medicaid step in.


Your future is literally in your hands and here's why you must have a financial plan, long-term care insurance policies, etc to cater to your LTC costs.


1. Financial Security

Long-term care services, such as nursing homes, assisted living facilities, or in-home care, can be quite expensive. Without proper preparation, these costs can quickly deplete your savings and assets. Planning protects your assets for other needs or to pass on to your loved ones.


2. Availability and Quality of Care

Planning increases your chances of accessing the care you need when the time comes. Adequate financial preparation gives you more options and flexibility in choosing the type and quality of long-term care that suits your preferences and needs.


3. Peace of Mind for Loved Ones

Planning for long-term care costs alleviates the burden on your loved ones. It reduces the likelihood that they will have to bear the financial responsibility of your care or make difficult life decisions under stress. 


4. Avoiding Hasty Decisions

Without proper planning, the need for long-term care can often arise unexpectedly due to an injury, illness, or sudden decline in health. In such situations, family members might have to make hasty decisions under emotional and financial pressure.


5. Access to Funding Options

Long-term care can be funded through various means, such as personal savings, insurance policies, government programs, or a combination of these. By preparing for the cost of care, you have the opportunity to explore and secure appropriate funding options before the need arises.

By taking proactive steps, you can better navigate the complexities of long-term care and maintain control over your future well-being.


Final Words

Preparing for long-term care is crucial for ensuring a secure future. By educating yourself, assessing finances, exploring insurance options, and planning for home modifications, you can navigate long-term care with ease.


Consider partnering with Kendal At Home, a trusted aging-in-place organization offering comprehensive support and services, including professional care with experienced caregivers, long-term care coordination, care coverage, and planning for healthy living.

Start planning today to enjoy peace of mind and a fulfilling aging experience.

Healthy aging is hard on your own. Kendal at Home can help you age well and enjoy your retirement.

Register for a Seminar to Learn More


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