What challenges will you face in retirement? For many seniors, one of the biggest financial obstacles is paying for long-term care. The U.S. Department of Health and Human Services estimates that today’s 65-year-olds have a 70 percent chance of needing long-term care during retirement. Long-term care is usually needed for a few years, and 20 percent of those who need care require it for more than five years.1

Long-term care is usually needed because of cognitive disorders such as Alzheimer’s. However, it can also be needed due to things like strokes or mobility issues. Those who require long-term care may need help with things like eating, bathing, dressing or a wide range of other day-to-day tasks. Care is often provided either in a facility or in one’s own home.

As you might expect, long-term care can be costly. If you don’t have a plan in place, you may struggle to get the care you need. Below are three strategies you can use to fund your future long-term care needs. A financial professional can help you develop and implement a plan.

Retirement Savings
You can always pay out of pocket for your care and take money from your retirement assets. However, doing so could quickly deplete your savings. In fact, if you need care for a long period of time, you could run out of money altogether.

According to a recent Genworth study, the average monthly cost for an assisted living facility is $3,750. In-home care isn’t much cheaper. The average monthly cost for an in-home aide is more than $4,000.2

Considering that you may need to pay for care for years, it’s easy to see how this approach could be infeasible. If you’re married, you may spend all your assets on your care and leave your surviving spouse with few resources after you pass away. It may be wise to consider other funding options.

Medicare and Medicaid
Many seniors assume that Medicare will cover their long-term care costs, but that usually isn’t the case. While Medicare is a valuable resource, it doesn’t cover everything. It may cover some temporary care costs if the care is related to a covered medical procedure. However, Medicare won’t cover ongoing costs for aid with basic living activities.

Medicaid does cover long-term care costs, but it comes with a few qualifications. To be eligible for Medicaid, you must have little income and few assets. Many people spend down their own assets on long-term care before they qualify for Medicaid coverage. While you may use Medicaid at some point, you may not want to count on it as your primary funding source.

Long-Term Care Insurance
Long-term care insurance is a popular strategy because it’s flexible. You can find a policy that fits your precise needs and budget. With a long-term care insurance policy, you pay premiums to an insurance company and, in return, it pays for some or all of your long-term care costs when the need arises. The terms of the coverage depend on your specific policy.

Most policies cover care provided either in the home or in a facility. Some also cover home modifications for things such as wheelchairs, lifts or safety equipment. In many ways, long-term care insurance can help you stay in your home rather than move into a facility.

Ready to develop your long-term care funding strategy? Let’s talk about it. Contact us today at MasterPlan Retirement Constultants. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.


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Investment advisory services offered through MasterPlan Retirement Consultants, Inc. a Registered Investment Advisor in the state of Georgia. Insurance products & services offered through Fricks and Associates, Inc. MasterPlan Retirement Consultants, Inc. & Fricks and Associates, Inc are affiliated companies.
MasterPlan Retirement Consultants, Inc. & Fricks and Associates, Inc are not affiliated with or endorsed by the Social Security Administration or any government agency.
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