Preparing For Long-Term Care Costs

April 29, 2011

When you are planning for your retirement and the ultimate distribution of your assets to your loved ones after you pass away it is important to make accurate projections with regard to anticipated expenses during your post-work years. We all like to stay positive and expect the best, but if you want to plan intelligently you must do so while being prepared for less than pleasant contingencies as well.
The United States Department of Health and Human Services tells us that about 70% of people who reach the age 65 will someday require long-term care either in the home or at a nursing home or assisted living facility.  So the reality is that it is likely that you will someday need this type of care, and the costs are considerable. According to the annual MetLife Mature Market Institute survey the national average for a yearlong residence in a private room in a nursing home was $83,500 in 2010. A year in an assisted-living facility would run you about $40,000 on average.
As you can see, these expenses are an important factor to project into your long-term budget. Below are a few of the ways that people approach the costs associated with long-term care.
Long-Term Care Insurance
You can purchase insurance that will pay for long-term care should you need it at some point in time. The premiums are expensive but the younger you are when you obtain the coverage the more affordable it is.
Medicaid
It is possible for seniors who need long-term care to qualify for Medicaid while still retaining possession of their homes, vehicles, and personal valuables. If you are married and your spouse needs long-term care there are strategies that can be implemented that can enable you to maintain your standard of living and retain your personal assets while your spouse utilizes Medicaid to pay for his or her long-term care needs.
Out-Of-Pocket
Of course, the obvious way to pay for long-term care is to simply take out your checkbook and a pen and write a check. For some people it may take some careful planning to be in this position, but if you are interested in building wealth throughout your life and you get the right advice long-term care expenses should be something that you can absorb. If long-term care insurance has been part of the planning, however, you can both prepare for the need for long-term care and not adversely affect your hard-earned estate.

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