– By George Leamon, CLTC –
As millions of baby boomers in the United States rapidly approach old age, experts predict the number of long-term care patients will double over the next 30 years. What does that mean for you? It means that if you don’t have a long-term care plan in place, you and your family may have to face some tough choices down the road.
Read on to learn why a long-ternl care plan is critical for every baby boomer.
A booming generation
Between the years of 1946 and 1964, the United States experienced an unprecedented baby boom. More than 76 million American babies were born during that relatively short 18-year span. Representing a disproportionate 28 percent of the U.S. population, the baby boomer generation will certainly make
waves as they sail into retirement.
By 2050, the youngest surviving baby boomers will turn 85. That will raise the population of people 85 and over by a Whopping 300 percent. Because the majority of people need some form long-term care by the age of 85, the long-term care system will be overrun with baby boomers by 2050.
On top of that, Americans are living increasingly longer lives. Recent estimates give a healthy 65- year old man a 24% chance of Jiving to at least 90 and a healthy woman a 35% chance of living that long. While this is great news, the longer we live, the more likely we are to suffer from a long-term care event.
What does all this mean for you? It means now is the time to put a plan in place.
The hefty price tag
If you or a loved one suffers from an illness that requires long-term care, get ready for some sticker shock. A year-long stay in a nursing home can cost between $40,000 and $80,000 or more. While prices vary by state and the type of care required, one thing is consistent across the board when it comes to long-term care: it’s phenomenally expensive.
Just take a look at the average costs of long-term care in the U.S.:
- $5,566 a month for a semi-private nursing home room
- $6,266 a month for a private nursing home room
- $2,968 a month for care in an assisted living unit
- $19 per hour for a home health aide
While this may not seem like a huge expense, these costs can quickly add up and eat away at your nest egg. For example, let’s say you hire a home aide to assist your husband just three times a week for four hours. At $19 an hour on average, that would come out to $228 a week. That adds up to nearly $12,000 a year. Unfortunately, Medicare does not cover these exorbitant long-term care expenses.
To top it off, informal home care is simply not a realistic option for most families these days. After all, most children of baby boomers are struggling to balance their own work and family life. They simply don’t have the time or resources to care for sick parents.
This is why it’s critical for each and every family to plan ahead for a potentially expensive long-term care event. Without the proper protection, such an event could devastate a family’s finances.
The simple solution
How can boomers handle the skyrocketing costs of a potential long-term care event? The answer is simple: long-term care insurance (L TCI). Without LTCI, a nursing home stay or another long-term care event could devastate your family’s finances. Because LTCI covers many of these expenses, this valuable insurance will not only protect your finances-it will also help you to maintain your current standard of living if you or spouse requires long-term care.
Even the affluent need coverage
Let’s say you and your wife are 65, and you have $2 million in liquid assets, not including your home. With that much cash, you probably assume that you’d have more than enough funds to cover a 5-year stay in a private nursing home room. However, you’ve forgotten to factor in a few additional costs of self-insuring for long-term care:
- Inflation: The ever-increasing rate of inflation could quickly magnify the cost of long-term care. What costs $200 today could cost as much as $1,000 20 years from now.
- Taxes: If you’re forced to sell an asset that has appreciated in value or take an IRA distribution to cover the cost of long-term care, you’ll probably face some hefty tax consequences.
- Lost Investment opportunities: If you end up paying out of pocket for long-term care for five years, you’ll lose out on other investment opportunities.
When you factor in these additional costs, it turns out that the real cost of long-term care for you and your wife would be much more expensive than you realize. This is why everyone stands to benefit from long-term care insurance-even affluent seniors.
Gain peace of mind with LTCI
Without L TCI, the cost of a nursing home stay or a home health care aide could wreak havoc on your finances and whittle away at that nest egg you’ve worked so hard to build. Don’t burden your loved ones with this kind of emotional and financial strain. Create a long-term care plan today to save your family a lot of heartache and stress tomorrow.
“There are four types of People in this world. Those who have been caregivers. Those who are caregivers. Those who will need a caregiver. Those who will be a caregiver.”
– Roslyn Carter
George T. Leamon, CLTC – Lutgert Insurance