It is crucial to consider the expenses of additional care during retirement because the likelihood of needing it is high. According to the Administration for Community Living, there is a nearly 70% chance of requiring long-term care once you reach the age of 65. However, long-term care services, whether provided at home, in assisted living facilities, or nursing homes, can be quite costly. Jeff Busch, a financial advisor at Elysium Financial in South Jordan, Utah, emphasizes that these expenses are typically not covered by health insurance or Medicare.
According to a survey conducted by Genworth, the cost of a private room in a nursing home can easily surpass $100,000 per year, and semi-private rooms are not significantly cheaper. Furthermore, these costs are expected to continue rising in the foreseeable future. The good news is that with proper planning, it may be possible to reduce the expenses associated with nursing home care. Busch suggests that long-term care insurance is a valuable resource for managing these costs.
To mitigate the financial burden of nursing home care, it is advisable to purchase long-term care insurance. Here's how long-term care insurance can help reduce nursing home costs, as highlighted by Busch:
1. It can cover nursing home costs entirely: By planning accordingly, long-term care insurance can potentially cover the entire expense of nursing home care. To ensure your policy covers these expenses, follow these steps:
- Determine your cost of care: On average, individuals requiring nursing home care will need it for approximately one year. It is prudent to plan for two years of coverage in case of an extended stay. Utilize the Genworth cost of care tool to estimate the future cost of a nursing home. As a general guideline, plan for the need of a nursing home at the age of 70. For instance, if you will turn 70 in 2034, use the Genworth tool to determine the cost of a nursing home at that time.
- Purchase a policy with sufficient coverage: Ensure that the long-term care insurance policy you purchase provides enough coverage to meet your needs.
By taking these steps and investing in long-term care insurance, you can better manage the growing expenses associated with nursing home care.
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