The odds can be a bit worrisome. The typical 65-year-old is expected to live another 20 years and has over a 50% chance of needing some form of long-term care services in their lifetime.
The average cost for long-term care today is around $138,000. Medicaid can cover part of this cost, but only for the impoverished. Long-Term Care insurance (LTCI) helps cover the risk of a long-term care event, but only about 10 million Americans are covered.
The limited number of insurance carriers selling long-term care policies and premium rate hikes on earlier policies have been a deterrent for some people. As a result, long-term care insurance policies can be too expensive for many middle-income families.
If you’re one of the millions of baby boomers who think the cost of LTCI is too high for your household budget, you have a few other options. They just take a little more planning and creativity.
Start Where You Can
If you want to protect yourself against potential long-term care expenses, build a financial safety net now. Focus on your current spending and saving and start thinking about your living arrangements as you get older. Consider who your support system may be (i.e. family and friends), and look into the cost of long-term care services in your community.
Ask yourself, “Can I put a little more money aside than I have been?” You may find extra money with kids out of college and the potential of earning income with part-time or contract work into your retirement years. Whatever you do, proactively plan now and don’t wait until it’s too late.
“Living in community can help you be more efficient with your resources and the companionship can help avoid loneliness.”
Save on Housing Expenses
While many desire to “age in place” at home, it’s not necessarily the best idea when you’re creating your own DIY long-term care plan. Long-term care events typically happen in your 80s, when social isolation becomes a big concern.
Co-housing, home-sharing, and other communal living arrangements can help reduce your cost of living and offer a built-in community. Living in community can help you be more efficient with your resources and the companionship can help avoid loneliness.
Live with Less
Cash flow can sometimes increase in retirement as elder individuals naturally spend less on stuff like jewelry, clothes, and furniture. As people enter their 60s and 70s, more are engaging in experiences such as volunteering, taking classes, traveling, mentoring, and spending time with their family and friends. A thrifty and frugal lifestyle doesn’t mean a lower standard of living when you’re out enjoying activities with others.
Buy Some Coverage
It’s important to talk with your children, relatives, and longtime friends about long-term care. Can you rely on them if you need help? How often would they be available?
If you’ve embraced this basic plan which involves working longer, spending less, saving more, and putting yourself in community with mutual support, let’s take another look at long-term care insurance. It may make sense to have a small layer of coverage on top of your DIY plan.
Your monthly premiums can be lower when you choose long-term care coverage for less than five years with a reduced daily or monthly benefit. Short-term care coverage is also available for under one year which can help fill any gaps in your plan.
The elements of creating a long-term care financing plan are something even the wealthiest of society need to consider as they enter their second half of life. Get started on your plan today and speak with your loved ones about your options.
To learn more about short-term or long-term care coverage, request a quote and speak with an LTC specialist today.