Even though they say the best things in life are free, everything comes at a price. Even aging: As Americans enter retirement, they must grapple with rising healthcare costs. Whether seniors receive home care or enter assisted living, understanding the costs is essential to planning the golden years.
Left without a financial plan for the future, seniors could face challenges in paying for care — a particularly risky situation given that costs continue to increase yearly without abatement. Yet, while the subject is sensitive to broach in retirement planning, it’s important to look at savings, lifestyles, and care needs. With this honest appraisal, seniors and their families can more effectively plan a high-quality retirement that gets them the care they need.
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Most Are Unable to Predict Costs
“63 percent said they were concerned about paying for long-term care.”
The difficulty in preparing financially was recently underscored by a Nationwide Retirement Institute survey on the costs of long-term care. While there’s a 70 percent probability an individual will need long-term care at some point after turning 65, about two-thirds couldn’t estimate the costs they might encounter should they need such care. What’s more is 63 percent said they were somewhat or very concerned about their ability to pay for these expenses.
The biggest obstacle seniors may face in preparing for retirement is the lack of clarity regarding long-term care costs. You don’t necessarily have to crunch the numbers, but you can do some general research to define the costs of various types of care. From this baseline, seniors can more accurately understand their financial standing in the context of long-term care costs and identify any potential gaps or problems.
Understand what Medicare Covers
Medicare is a critical resource for all senior Americans, but it won’t pay for everything in retirement. While Medicare parts A and B—what’s sometimes referred to as Original Medicare—will cover hospital and medical expenses (and, to a limited extent, some nursing care), it does not include long-term care. Many seniors may be surprised to learn this, underscoring the importance of educating yourself on care costs.
Assess Your Assets
In preparing to pay for long-term care, seniors ultimately have to understand their income and savings sources. The first place to start is your personal assets, this includes whatever deposits you have in the bank, investments you can tap and other liquid assets that can be converted to cash. One interesting source for seniors to consider is their home. The costs of assisted living and home care are much more comparable than many may expect, and if seniors opt to enter a retirement community, they could even save money on long-term care. In this scenario, proceeds from a home sale could be a big chunk to put toward care.
When preparing for the costs of care, seniors should consider all their options. Talking with Edgewood during this planning process can help seniors and their families find an optimal community that offers high-quality care services and a retirement experience.
