For many retirees, medical costs will be a major retirement expense. In fact, Fidelity estimates that the average 65-year-old couple will spend nearly $260,000 out of pocket on health care in retirement. That figure represents the cost of items above and beyond Medicare coverage, including premiums, deductibles, copays and more.1
You may be surprised to learn that the Fidelity estimate does not include long-term care, which is an increasing need for many seniors. Long-term care is extended support and assistance with basic living activities such as mobility, bathing, eating and dressing. It’s often needed because of things like Alzheimer’s, strokes and major surgeries.
Unfortunately, many retirees don’t adequately plan for long-term care costs. They assume that they won’t need care, or that it will be covered by Medicare or some other coverage. When they eventually do need care, they may be forced to drain their assets or settle for a level of care that doesn’t meet their quality expectations.
Have you created a plan for funding your long-term care? If not, what’s stopping you? Below are three common myths that some retirees use to justify their lack of planning. If any of these sound familiar, it may be time to adjust your thinking.
You won’t need it.
You may be very healthy today. However, current health isn’t a predictor of whether you will need care in the future. In fact, the U.S. Department of Health and Human Services estimates that 70 percent of all of today’s 65-year-olds will require long-term care at some point in their lives.
If you do need care, chances are good it could last for months, or even years. On average, men need long-term care for 2.2 years, while women require it for an average of 3.7 years. Approximately 20 percent of 65-year-olds will need care for at least five years.3 It’s possible you may not need care, but the statistics suggest it’s a very real possibility you will.
Medicare will cover it.
Medicare is a valuable and helpful resource, but it doesn’t cover everything. One cost that it rarely covers is long-term care. It may cover care if that care is part of a stay in a rehabilitative center as a result of a hospitalization. Even then, though, the coverage is usually only temporary and partial. Medicare may provide some funding, but don’t consider it a long-term strategy.
Your family will take care of you.
You may be fortunate enough to have children, grandchildren and other loved ones nearby. Perhaps you’re assuming they will help provide care. However, take some time to consider how realistic that expectation is. Also, think about how their role as caregiver may impact their life.
Family caregivers often contribute many hours each week, to the extent that it may limit their ability to work or develop personal interests or relationships. Many family caregivers deal with resentment and fatigue. Do you want to risk those hard feelings in your relationship with your children?
Fortunately, there are other strategies to consider. At Lighthouse Financial & Tax, we can help you evaluate your objectives and your needs. We can then help you develop a long-term care funding strategy. Let’s connect soon and start the conversation.
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