How Can the Need for Long Term Care Insurance Affect Retirement Savings?

How Can the Need for Long Term Care Insurance Affect Retirement Savings?


When Long_Term_Care_Insurancecalculating how much you need to save for retirement, do you take in to account the amount you will need for Long Term Care (LTC)? Experts believe that 70% of people over the age of 65 will eventually need some type of Long Term Care. Costs for LTC are increasing rapidly. Protecting yourself with Long Term Care insurance will assist you in mitigating your LTC costs & will help protect your retirement savings.

What is Long Term Care Insurance?

Long Term Care is care needed for individuals who require assistance performing activities of daily life or need assistance due to cognitive impairment from accident, illness or advanced age.

Long Term Care insurance is designed to pay for long-term medical & non-medical services that would otherwise be paid for out of your own pocket.

Depending on the type of policy, LTC may cover

  • Nursing homes
  • Assisted living
  • Adult day care
  • Home care
  • Personal care

Why is Long Term Care Insurance Important?

Like all types of insurance, LTC insurance is designed to protect you, your family, & your assets. Younger family members often end up taking the responsibility of caring for aging parents. When an elderly adult becomes sick & does not have any insurance to pay for medical care, the burden often falls on the family – and that cost is increasingly expensive. The fact that individuals are living longer lives contributes to the need for LTC insurance.

What about Health, Disability Insurance, or Medicare?

Major medical does not cover you & your family in the same way LTC insurance can. Health insurance plans generally cover only about 30 days of recuperative time, while LTC insurance covers extended periods of time.

Disability insurance is meant to replace salary, not cover the cost of care. Any ongoing long-term medical care due to an accident/ injury will have to be paid for out of their own pocket.

Medicare reimburses for a maximum of 100 days. The average period for repayment of expenses is a mere 28 days. This is not sufficient for extended care needed later in life.

What should you do?

LTC insurance should be an integral part of your retirement planning. Without LTC insurance, your retirement savings will take a hit due to rising health care costs. For example, the average daily rate in 2012 for a nursing home a semi private room was $222. This equates to over $80,000 for one year of care. If an LTC policy was in place these costs would be mitigated.

It is best to be in good health when purchasing a policy, so consider buying LTC insurance at a younger age, when you are more likely to be healthier & premiums are lower.




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