Planning for the Long Term
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Planning for the Long Term

November 21st, 2018 | 5 min. read

No one pictures themselves in long-term care, but most of us are going to need it.

If investments are the financial planning equivalent of the charismatic lead singer of a band, long-term care insurance is the humble, publicity-shy bass player. Like the bass player, nobody notices long-term care coverage unless it’s missing. 

That shouldn’t diminish its importance, though, because the absence of a long-term care plan can quickly and easily drain your assets and lay waste to your otherwise carefully constructed plan. As shocking as it may sound to you if you’ve never been confronted with it, the median annual cost for full-time home health care or residency in an assisted living facility is near $50,000 and the annual cost for residency in a nursing home can exceed $100,000.* 

It should be noted that these expenses are not covered by Medicare. And though Medicaid does cover many of the expenses associated with long-term care, it does so only when all of your other available assets have been exhausted. And it goes without saying that your choice of facilities is severely limited if you are dependent on Medicaid.

Like most forms of insurance, long-term care insurance is easier to obtain and less expensive if you buy it when you’re relatively young and healthy. That doesn’t mean you should rush out and begin exploring long-term care solutions if you’re in your 20s, but if you’re nearing or beyond age 50, it’s not too early to look into it. 

Historically, one of the biggest deterrents to purchasing long-term care coverage has been the possibility that it won’t be needed. After all, many people never have to spend time in an assisted living facility or nursing home. But, statistically, there is a roughly 70% chance that someone turning 65 today will need some type of long-term care service in their remaining years.** 

It should also be noted that people prudently purchase insurance to cover many other possible expenses that they may or may not ever incur – like the cost of repairing or replacing their home as a result of storm damage or a fire, or the cost of having major surgery. In other words, no one purchases long-term care coverage in the hope that they will be able to use it someday – they purchase it because of their desire to protect their assets for themselves and their heirs in the event that they do require cost prohibitive long-term care services.

If you don’t already have a plan for long-term care in place and you’re age 45-60, talk to your Financial Advisor about the solution that makes the most sense for you and your family.

*Genworth 2018 Cost of Care Survey


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