“When I die, I want to go peacefully in my sleep like my grandfather did—not screaming like the passengers in his car.”
What does this gruesome joke have to do with long-term care (LTC) planning? Surprisingly, quite a bit. First, unlike the grandfather in the joke, most people do not die quickly. If everyone remained healthy and mobile until death, LTC planning would be unnecessary. However, most people require weeks, months, or even years of medical care and support before they pass away. If you are over the age of 65, you have a 50% chance of needing LTC.
Second, men have shorter life expectancies than women and men typically require medical care and support first. Usually the woman is in better health and can be the in-home caretaker for her husband—in fact; a whopping 75% of caregivers are women.
Third, like the screaming passengers in the car, watching and providing extended care to an ailing loved one can be a horrible experience and an unbearable burden. In addition to the physical problems caused by overexertion and sleep deprivation, caregivers frequently experience depression, anxiety and other psychological problems. A friend of mine spent his 20s taking care of his father who was afflicted with Alzheimer’s. He doesn’t regret the time spent caring for his father, but he lost a decade of his youth to the task.
Lastly, although the chapter started with a joke, LTC is a serious subject with long-lasting implications for you, your spouse, your family, and your parents.
Is Long-Term Care Planning Necessary?
Financial planning is often more of an art than a science. There are only a few hard and fast rules that apply to most everyone. LTC is different; for the majority of middle-class or affluent families, LTC planning is absolutely necessary.
- The average cost for a private room in a nursing home is over $66,000.
- The average cost for a shared room in a nursing home is over $57,000 per year and rising rapidly.
- The average nursing home stay is 2.4 years.
- The current cost of an average entire nursing home stay is $158,766.
- 10% of nursing home residents will stay there five years or more.
- 43% of people receiving LTC are under age 65.
- 12.1% of people between the ages of 65-74 need LTC.
- 27.2% of people between the ages of 75-84 need LTC.
- Almost 70% of people over age 85 need LTC.
Don’t expect the government to help.
Contrary to popular belief, Medicare doesn’t provide LTC benefits and only the most destitute receive LTC support from Medicaid. Even those receiving help from Medicaid, the provider of last resort, may be out of luck since Medicaid will soon have problems providing for the increasing aged population. The population over age 65 in the United States will nearly double in the next 30 years, placing significant financial pressure on our government. According to The Coming Generational Storm, “The longer people live, the more likely they are to outlive their assets. This means rising calls on Medicaid.” With the long-term viability of Medicare and now Medicaid in question, it is only prudent to plan your own LTC strategy.
We dutifully invest in auto and homeowner’s insurance, but neglect the insurance that we may need the most. We neglect to plan for LTC for the same reasons we don’t like to talk about life insurance or wills. The potential need for LTC, for or our loved ones or us, is depressing. The other Financial Makeover topics you’ve read about and implemented have been much more positive topics—they imply the potential for a happy, financially secure future. Planning for LTC implies the possibility of disability and the inevitability of aging. Unfortunately, having no plan is still a plan. The statistics tell us that sooner or later we all need to think about LTC.
Your LTC plan should be to hope for the best, but to prepare for the worst. You can either proactively plan a LTC strategy, or you can avoid the issue and leave your spouse, parent’s, and children’s LTC plan to chance.
If you think you are too young to plan for LTC, you are wrong.
Regardless of your age, you likely have parents that need to think about their LTC plan. Too often a parent’s lack of planning can decimate their children’s finances. Why? Most children want their parents to be happy and comfortable. When care is required, nearly everyone wants to stay at home as long as possible. Although home health-care is usually less expensive than nursing-home care, it is often still a huge burden. If more skilled care is needed, the annual costs can reach $50,000 to $75,000. If the parents can’t afford this, their children must make a decision. They can send their parents to a Medicaid facility or pay for better care themselves. With a little advanced planning, you won’t have to make this difficult and costly decision.
If your parents or loved ones don’t have a LTC plan, help them sort through their options, the cost of the care, and develop a strategy for paying for the care. Since you are ultimately responsible for your parent’s and spouse’s well-being, you should make it your responsibility to help them create a LTC plan.
The proceeding blog post is an excerpt from The Six-Day Financial Makeover: Transform Your Financial Life in Less Than a Week!, available now on Amazon.
About the Independent Financial Advisor
Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.