In other words, you’re going to need a much heftier retirement fund or a better plan, to prepare for the possibility of needing long term care. A recent article from CNBC, “This retirement expense has hit $100,000 annually–and it’s continuing to rise,” reports that a larger number of older adults will need specialized care. Another problem is a shortage of skilled workers. Care expenses will rise with wage demands. Your best bet: start planning now for how you’d like to receive—and pay for—your care.
Overall, the rising cost of care has outpaced inflation. The CPI (Consumer Price Index) for all urban consumers was 2.1% for the first half of 2018. The annual median cost of a room at an assisted living facility grew faster, and even the cost of a shared room in a nursing care facility increased—by 4.11%.
Here’s a look at the most expensive places to seek care:
Aging in Alaska is the most expensive state, if you need to be in a nursing home. The annual median cost for a private room: $330,873, according to the Genworth study. An alternative might be assisted living facilities. However, they offer less medical care or assistance. There’s also the option of having a home health care aide come to visit.
Home health care services cost the most in Hawaii, where patients pay an annual cost of $68,640 for just 44 hours a week of care at home. The growing demand for support services, is likely to push the cost of care even higher.
People planning to retire in five years or so, can prepare by working with a knowledgeable advisor. The first question is, where do you want to receive care? The next one is to plan for the worst-case situation, where you or a spouse need the care that only a skilled facility can provide.
The solution, if you can get coverage, may be a long-term care insurance policy, or a life insurance policy with a long-term care feature. The cost may be high but the costs you might incur without that coverage will be way higher.
Part of your planning should also include selecting trusted people, family or friends, who can be named to take over your financial matters (power of attorney) or medical care (health care power of attorney), should you become incapacitated, by illness or injury.
Your estate planning attorney will be able to help you prepare these documents, along with a comprehensive estate plan that protects you and your family while you are living and after you have passed.
Reference: CNBC (Oct. 20, 2018) “This retirement expense has hit $100,000 annually–and it’s continuing to rise”