What challenges will you face in retirement? For many seniors, one of the biggest financial obstacles is paying for long-term care. The U.S. Department of Health and Human Services estimates that today’s 65-year-olds have a 70 percent chance of needing long-term care during retirement. Long-term care is usually needed for a few years, and 20 percent of those who need care require it for more than five years.1
Long-term care is usually needed because of cognitive disorders such as Alzheimer’s. However, it can also be needed due to things like strokes or mobility issues. Those who require long-term care may need help with things like eating, bathing, dressing or a wide range of other day-to-day tasks. Care is often provided either in a facility or in one’s own home.
As you might expect, long-term care can be costly. If you don’t have a plan in place, you may struggle to get the care you need. Below are three strategies you can use to fund your future long-term care needs. A financial professional can help you develop and implement a plan.
If you’re approaching retirement, you may be in the process of developing a budget and determining how you’ll fund your cost of living. You’ll likely face expenses for things such as housing, food, utilities, travel and more. You may also face costs for things like taxes and debt.
Health care, however, is one major expense category you shouldn’t ignore. Many retirees assume that Medicare covers all health care costs. That assumption is usually incorrect. In fact, Fidelity estimates that the average retired couple will spend $275,000 on out-of-pocket medical expenses.1 That figure doesn’t even include the cost of long-term care.
The truth is that Medicare doesn’t cover everything. In fact, there are some services that aren’t covered by Medicare at all, and many are only partially covered. You’ll have to pay the difference, possibly out of your retirement assets.
There are a lot of things to consider before you retire. One thing that some people forget to plan for, however, is their health care in retirement. Many people assume that Medicare will cover all their health care expenses once they retire. The reality is that it doesn’t.
According to Fidelity, the average retired couple typically has to pay $260,000 on health care expenses.1 That figure includes things like copays, deductibles, premiums and more. By planning ahead, you can help to avoid draining your retirement funds to pay for health care expenses. Act now to develop a sound health care funding strategy, and you can save your retirement money for things you want to do rather than spend it on health care expenses.
You’re probably aware of the risk posed to retirees by long-term care, which is extended assistance with daily living activities such as eating, mobility and bathing. Long-term care is often provided either in a facility or in the home, and it is usually very costly.
AARP recently published a report on the current state of long-term care. Specifically, it ranked each state by the quality and affordability of care available to seniors. While the scores and information vary by state, there is some information that’s applicable to all retirees, regardless of where they live.
Do you have a strategy to pay out-of-pocket medical costs in retirement? If not, now may be the time to start planning.
According to Fidelity, the average retired couple will spend nearly $260,000 on out-of-pocket health care costs.1 Those costs are for things like deductibles, copays, prescription drugs, premiums and much more. It doesn’t include costs for long-term care, which could significantly increase your health care expenses.
Many retirees incorrectly believe that Medicare will cover all their medical costs in retirement. The truth is that Medicare usually covers only a portion of your expenses. Some types of care aren’t covered at all. That means many retirees face sizable bills that they must pay out of pocket.
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