Americans who are looking to prepare for their financial future may need to do more than just save up money in various retirement accounts. The potential need for long term care funds could be necessary, and this cost may be significant.
The average cost of home care in 2014 is approximately $19 per hour, according to a report from Genworth. This rose by an average of 1.2 percent in the last five years. However, when considering the cost of assisted living facilities, the expenses can be notably higher. On an annual basis, the average was $42,000, which was an increase of 4.29 percent per year. For private nursing homes, the annual cost of a room was $87,600, for an annual gain of 4.19 percent.
“Since we first launched this study, we have seen long term care costs march higher year after year,” said Bob Bua, vice president and business leader of Genworth subsidiary CareScout. “If you live to 65, there is a 70 percent chance you will need some form of long term care services so creating a sound financial plan for managing future long term care costs is very important.”
It can take three years, on average, for a long term care claim, the report explained. This would equate to close to $136,000 for home care, while an assisted living facility would be $143,000. For private nursing homes, rooms would be more than $260,000. When looking 25 years into the future, the inflation rate would bring these costs to nearly $840,000.
Retirement savings difficult for some
Long term care is just one aspect of saving for retirement, and many Americans may not be preparing their personal finances correctly. According to a report from Franklin Templeton Investments, nearly 40 percent of Americans have not started saving money for retirement.
“Retirement saving has been a concern for a long time and, with the government’s recent focus on the issue, it is our hope that Americans will begin to use the resources available to them to better plan for what’s next,” said Michael Doshier, vice president of retirement marketing for Franklin Templeton Investments. “There are a few simple steps you can take to prepare for what’s next, including acknowledging your own retirement goals and concerns, learning about the various sources of income and matching them to your likely expenses.”
Just one-quarter of Americans think that their retirement will be better than their ancestors, the report added. Another 41 percent felt that it would be a more difficult time.