Saving for Retirement: Consider Your Long-Term Care Needs

When saving for retirement, many of us envision spending our money on our future beach home or round-the-world travel. However, most underestimate healthcare expenses as we grow older. In fact, approximately 70% of those aged 65 and older require a form of long-term health care at some point during their lives.¹

Often, long-term care is needed when someone has an accident, illness or chronic condition and cannot perform the basic activities of living including eating, bathing, dressing, and transferring (getting in/out of a chair or bed).

With the aged 65 or older segment of the population set to grow larger than the younger than age 18 segment by 2040², the need for long-term care will only grow.

What Type of Care is Needed?

No one wants to envision themselves needing around-the-clock care and losing their independence. However, the first step is determining the type of care that is required and balancing that need with available funds to pay for the care.

• Private home care: Hands-on assistance with daily activities such as bathing, eating, dressing, etc.
• Adult day health care: Planned activities that may include personal care, transportation and meals provided by caregivers.
• Assisted living facility: Personal care provided in a residential facility for those who do not need care 24 hours a day.
• Nursing home: Residential facility that provides a higher level of care that is provided on-site, 24 hours a day.

As your loved ones age, it is important to recognize the signs of cognitive decline as early as possible. If someone cannot perform two activities of daily living without help, some form of long-term care assistance may be needed.

The Importance of Planning Ahead

Long-term care could be needed for years and can be expensive, draining your hard-earned retirement savings. A common misconception is that Medicare or health insurance will cover these costs. Medicare Part A helps pay for short-term inpatient stays (up to 100 days) in hospitals, skilled nursing facilities, partial home care and hospice care. However, it does not cover a stay in a long-term care facility or the cost of custodial care.³

What are Your Options for Paying for Long-Term Care?

1. Pay for it out of pocket: A potential viable option for those who have a large nest egg saved for retirement.
2. Get help from loved ones: Family or friends can provide care. In the long run, this extra expense may cause unwanted stress that could negatively affect everyone in the family. New research revealed that nearly half of family caregivers experienced at least one financial setback.⁴
3. Long-term care insurance: Long-term care policies work similar to other forms of insurance where you pay premiums and make claims if you need the covered services.

Speak with a Jemma Financial Advisor

Long-term care planning is not only complex but also emotional. It’s important to have these discussions early when you or a family member is still in good health. Creating a roadmap of long-term care decisions may make transitions easier.

Whether it’s setting aside money in a separate account or determining a preferred window to purchase an insurance policy, your Jemma Financial Advisor can guide you through the process.

Sources:
1. SingleCare, Long-term care statistics 2022, February 2022
2. Massachusetts Institute of Technology (MIT), MassMutual^®, Connecting with Your Next Generation Retiree Clients about Long Term Care Planning, 2022
3. Custodial care is non-medical care that helps individuals with basic everyday activities.
4. AARP, AARP Research Shows Family Caregivers Face Significant Financial Strain, Spend on Average $7,242 Each Year, June 2021