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long term care planning why you cant ignore it

Long-term care planning (or LTC planning for short) isn’t perhaps the most exciting topic. But most people can’t afford to ignore it in retirement. In one of its bulletins, AARP observes "by the time you reach 65, chances are about 50-50 that you will require paid long-term care someday."

For Christine Benz, Director of Personal Finance for Morningstar, it’s the four-ton elephant in the room. "Long-term care is the unsolved problem for so many people," she told AARP. And probability of use might not be the only reason why. There’s also the hefty price tag to consider.

For years, Genworth has tracked the monthly national median costs of various long-term care services in its "Cost of Care Survey." Those nationwide costs swelled by double-digit percentages from 2009 to 2017, with some LTC services seeing a 30+% cost increase.

"What about state to state?" you may ask. Let’s look at the median expense for a common LTC need, nursing home care, and its cost depends on where you live. In 2017, the cheapest state for a semi-private room in a nursing home was Texas at $4,567 per month, while Connecticut was the most expensive state at $12,517 per month.

Here's another clincher to think about -- that is without factoring the cost impact of other healthcare needs in retirement as well!

AARP long term care planning

Source: AARP, Nicholas Rapp, AARP Bulletin, 5 Things You Should Know About Long-Term Care Insurance, Article Link. All Rights Reserved.

Knowledge is foresight, so it pays to understand the basics of long-term care and what it can entail for retirement planning purposes.

 planning for healthcare expenses in retirement

How should you include the price tag of healthcare costs in your retirement plan? Many people underestimate what their healthcare expenses may be. At times, it’s even to a great extent.

In a March 2017 survey by Voya Financial, 69% of baby boomers said they expected to pay “$100,000 or less” for healthcare expenses in retirement. Among retirees, 66% also expected their healthcare costs to be $100,000 or below.

The Growing Impact of Retirement Healthcare Costs

Last week we discussed the concept of “risk capacity” and its role in retirement financial security. Aside from retirement asset allocation, another part of income planning is accounting for expenses. Living expenses, long-term care costs, and healthcare expenses are three primary retirement cost drivers. It’s important to plan ahead and to have a strategic combination of volatile and conservative financial vehicles to meet these needs.

Just healthcare needs alone can impose a significant cost burden on your retirement lifestyle. In fact, research firm HealthView Services reports they’re one of the fastest-growing segments of retirement spending. Ensuring they aren’t neglected is a critical step. Otherwise they can be financially draining and greatly impact your standard of living in retirement.

What’s Going on with Healthcare?

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