PAYING FOR LONG-TERM CARE
The cost for long-term care services can be expensive. Today, the national average cost of one year of nursing home care is around $75,000*, and the cost continues to rise. The annual cost could easily grow to more than $160,000 in 20 years or $250,000 in 30 years based on inflation.** When you add up a few years of care, you're looking at an expense that presents very signficiant risk to your retirement income and savings.
LTC insurance is considered one of the most viable ways to protect yourself against having to pay out-of-pocket for all your long-term care expenses. In addition, there are other choices to consider when deciding on how to pay for long-term care- ranging from getting a reverse mortgage to relying on veterans benefits. To compare and contrast your options, Medicare provides an easy-to-follow chart (at www3.medicare.gov/LongTermCare/Static/PayingOverview.asp) that breaks down the pros and cons of each financing option, including whether or not you run the risk of running out of money when relying on certain options. For example, LTC insurance is one of the better options since it provides a low to moderate risk of this happening, while relying on personal savings provides a high risk. Importantly, this overview stresses that "the cost of long-term care can vary quite a bit depending on what kind of care you need, where you get the care and where you live."
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*John Hancock Cost of Care Survey, conducted by CareScout, 2008.
**Based on a 4.1% average rate of inflation over the past 30 years ending December 31, 2008, using the Consumer Price Index for All Urban Consumers.