Long term care can be quite expensive.

Long term care can be quite expensive.

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.

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2 Comments

  1. We are in denial about becoming frail, having an illness, or having an accident. We hope that nothing will happen to us and when it does, friends, family, or miracle will correct the situation.

    There is nothing wrong with needing help. We ask and hire people to help us with things we cannot do ourselves. Everyday when you are anywhere in public, you will view people helping people open doors, walk with them, help them sit down, move their wheel chairs, and help them in a variety of ways. This is care giving.

    Long term care plans are the fuel which keeps people’s financial commitments from being disrupted. Cars do not move with fuel, electricity, propane, or bio-fuels. A person’s life style does not move without money.

    Extended care plans (aka) long term care plans are the fuel which preserves a families life style.

    The consequences and burden are as much on a family as it is for those who need care giving.

    That is why it benefits those who are in reasonably good health and have cash flow beyond their regular expenses who would benefit with owing a long term care plan. The plans are not for you, but for your loved ones.

    Ask anyone who is in a care giving situation who is most effected those who need care giving or those who are responsible for their care giving and decisions about care giving.

  2. Samantha Wright May 5, 2014 at 8:21 AM

    I agree with Raymond here that there are some people who can’t accept the fact that they will become old, feeble and vulnerable to illness or disease that will require long-term care. Failing to accept this and prepare for this need comes with huge financial risk. How? According to http://www.ltcoptions.com/, 7 out of 10 of older adults who are 65 years old and above will require long term care, which comes with a hefty price tag. Without a financial plan to cover these future expenses, you’ll probably end up emptying all your retirement accounts.

    Planning for long term care is without a doubt necessary nowadays in order to protect your assets and as well as your family once the time comes that you’ll require long term care.

    Long-term care insurance is by far the popular choice but because of some rate issues today you can also consider other payment alternatives such as hybrid products, annuities, reverse mortgage and government programs. Take this pressing issue seriously as early as now in order to make the right choices that can make life after retirement more comfortable and debt-free.

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