Retirement Healthcare

What Is Long-Term Care? Breaking Down the Basics for Retirement Planning


Chances are you have heard of long-term care, but how does it come into play in retirement? What are the chances that you will need long-term care? How much will it cost? It’s important to consider these questions as you think about how you will manage healthcare expenses in retirement.

If your goal is to have a financially secure lifestyle, then you may want to treat the odds of you (or your spouse) needing long-term care as a fact. As we will see later on, the odds of some long-term care needs go up as people progress in their retirement years. This possibility can derail even the best-laid retirement plan if it isn’t adequately accounted for in retirement income planning projections. Nor will Medicare pay for many long-term care services and supports, as is often believed.

In this article, we will go over the basics of long-term care, how much it can cost you, and some strategies that can give some financial relief so that long-term care doesn’t drain your retirement savings.

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What Can Happen to Healthcare Spending in the Future?

What Can Happen to Healthcare Spending in the Future?

Healthcare spending in retirement has already been a hotbutton financial issue for some time. But the Covid-19 pandemic has turned the healthcare industry on its head.

According to an article on healthcare publisher, PricewaterhouseCoopers says it’s hard to tell what may be ahead for future healthcare spending. The professional services firm recently unveiled a new report on medical costs for employer-based health insurance plans, which had new some firsts.

For the first time ever in 13 years of doing this, PwC ran scenario-based analysis for its healthcare projections — instead of a single overall projection for medical costs. Read More

Study: Many Retirees Underestimate Healthcare Costs When They Retire

Study: Many Retirees Underestimate Healthcare Costs When They Retire

The high cost of healthcare looms as a major factor for retirees to deal with after they stop working. But a recent online survey revealed that things may actually be even worse than what retirees are predicting.

Sponsored by Nationwide Life Insurance Company, the survey was conducted from March through April of 2019. The 1,462 people who were polled were at least 50 years old. This group was a mix of pre-retirees, current retirees, and folks who had been retired for at least 10 years. An additional 516 caregivers were also polled.

The findings? Most of the retirees greatly underestimated their retirement healthcare costs. The majority predicted they would need to spend roughly $7,000 a year on healthcare in retirement. Nationwide estimated the real cost would be closer to $10,739 for the average retiree.

The insurer’s health cost estimate was based on the Summary of National Health Expenditures, with reported spending data from the 1960s to 2017. Read More

Retirement Planning for Long-Term Care

Retirement Planning for Long-Term Care

Making a plan to cover your long-term care needs in retirement is one of the most difficult issues you will face. No one knows what will be required in the future.

Some experts, such as Christine Benz with Morningstar, believe the probability can be quite high. In one of its bulletins (in which it also interviewed Benz), AARP estimates a 50 percent chance of someone needing some form of long-term care (LTC) at age 65 and beyond.

Of course, these statistical forecasts might not end up reflecting your personal situation. The truth? The answer may range anywhere from a price tag of zero to the need of skilled nursing care that costs hundreds of thousands of dollars over several years.

As fuzzy as that picture is, you can still plan effectively for the future potential costs of long-term care, not to mention other healthcare expenses. Read More

Using Partnership Plans in Long-Term Care Planning

Using Partnership Plans in Long-Term Care Planning

It’s one of the things we like to think about the least: needing help caring for ourselves when we are older.

While living to a ripe old age sounds great—and statistics show that many of us might be headed in that direction—the idea of not being able to fully care for ourselves is so daunting that we put off planning for it, or perhaps never plan for it at all.

Yet it’s an issue that is much better dealt with now, when we are best equipped to explore our options.

Maybe it’s sticker shock that prevents some of us from taking action. The cost of long-term care, known as LTC, is well reported. Genworth, a provider in the long-term insurance space, has published its Cost of Care Survey for the last 15 years. Read More

This Nobel Prize-Winning Physicist Sold His Medal to Help Cover Medical Expenses

This Nobel Prize-Winning Physicist Sold His Medal to Help Cover Medical Expenses

Photo Credit: Associated Press. All rights reserved, source link.

Nobel laureates are certainly top achievers. In 1988, Leon Lederman won a Nobel Prize for his work in physics. Apart from award-winning research into subatomic particles, he is famous for coining the infamous name of the Higgs bosin: the “God particle.”

Lederman passed away in a nursing home in Idaho on October 4. He was 96, according to the Associated Press. The AP describes him as a “giant in his field who also had a passion for sharing science.”

While Lederman’s contributions to science speak volumes, another striking story of him emerges from a past headline by NBC News.

And what happened? In 2015, the physicist was forced to auction his Nobel medal so he and his family could cover healthcare expenses. The medal sold for $765,000. It was a winning bid of $633,335 plus a buyer’s premium that drove the medal to its $765k sell price.

It’s yet another example of how high-cost retiree healthcare needs can change the financial situation of any of us. Read More

Unsure About the Annual Cost of Healthcare in Retirement? Here’s Why It Matters

Unsure About the Annual Cost of Healthcare in Retirement? Here's Why It Matters

Have you heard that the average retiree couple may pay as much as $280,000 in total healthcare costs in retirement? That certainly is a big price tag to mull over. And as Vanguard notes in a recent report, cost-of-retirement-healthcare estimates as a lump sum often keep people in a stop-and-shrug zone.

Such a substantial sum seems hard to account for. Not only that, a number of national healthcare cost surveys leave out the costs of long-term care in their estimates. Others treat long-term care as a separate area of expenses from retirement health costs. Either way, many Americans don’t know where to even start with planning for potentially high-cost health events during their golden years.        

Well, here’s some good news: planning for retiree health and long-term care costs is well within reach. In that Vanguard report, researchers found a more palatable way for educating people to take action about their retirement health needs: framing healthcare costs as annual expenses, not as a substantial lump sum. Read More

Long-Term Care Planning – Why You Can’t Afford to Ignore It

Long-Term Care Planning - Why You Can't Afford to 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 is 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 2020, 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 2020, the least expensive state for a semi-private room in a nursing home was Texas at $5,019 per month. Meanwhile, Connecticut was the most expensive state at $12,927 per month.

Here’s another clincher to think about. Those estimates are without factoring the cost impact of other healthcare needs in retirement as well!

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

Here’s What You May Pay for Healthcare Costs in Retirement

Here's What You May Pay for Healthcare Costs 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. Read More

The Growing Impact of Retirement Healthcare Costs

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. Read More

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