Planning for Retirement Healthcare

Planning for the golden years means not just planning for what income is needed to retire but also what new additional costs may arise. Studies show that many Americans have not considered the costs of healthcare in retirement and the impacts that these costs can have on outliving their money. According to a 2014 Fidelity Investment article, the average retiree will spend a total of $220,000 for healthcare. This cost includes health insurance premiums and out of pocket expenses for things like prescription drugs. What is missing? The costs associated for long term care. When you consider that according to our data home care costs $42,000 per year on average and receiving skilled care in a facility can run up to $100,000 per year per person it is important to consider the following components to help plan.

Component 1: Saving, yes. But planning, too.

Should you start saving money for long term care as part of your retirement savings? Absolutely. It is important to specifically earmark the investments you plan to use if care is required. The advantage of saving for LTC is you may never need it and that money can be used for other things. The disadvantage is that the cost of care is over and above your monthly expenses and if you need assistance for a while it can add up very fast.

Component 2: Work with a Long Term Care Specialist .

Long Term Care Insurance costs and underwriting can vary significantly from carrier to carrier and the policies have a lot of different options and features. It pays to work with a specialist who represents multiple carriers and will place at least 25 policies per year. A knowledgeable specialist can quickly determine your needs and goals and advise you on a plan that best fits your goals and budget and with a carrier that will accept you. Insurance is only good if you are able to get it and understand it.

Component 3: Have the conversation about the birds and the bees.

Not the one that you may have had in health class or as a kid, but the adult version that if you need care, who do you want to provide it and how will it be paid for. It can be an uncomfortable conversation to have with your family but it is important that they understand your wishes. Do you really want your daughter or son providing care for you if you need it? Can they afford to take time off work to help out? If you can’t change a light bulb or get to appointments, who will be able to do that for you? Having the conversation and then creating a written plan provides clarity for everyone and allows loved ones to know they are helping in a way that is desired when the unexpected happens.

LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can
help them.