If you weren’t already aware, the biggest expense for most retirees is that of health care. According to a Fidelity report, the average couple can expect to incur over $240,000 in health care costs during their retirement years. If you have loved one who needed specialized care or a nursing home during their later years, you understand how the costs can add up fast. To the surprise of many people entering retirement, Medicare does not cover the rising cost of most long-term care needs.
This puts the baby boomer generation in a tough place. Not only are they retiring at a rate of 10,000 boomers a day, many of them are supporting children who are entering their college years. To add to the financial strain, almost 50% of baby boomers were at risk of not being able to sustain their pre-retirement standard of living according to USA Today. Playing catch up with retirement savings is difficult enough. Add college expenses to the equation and it can feel near impossible to save.
And let’s not forget about Mom and Dad. Yes, baby boomers are not only supporting college students and catching up for their own retirement, many also have to support an elderly parent making it even more difficult to thrive financially.
Long Term Care Solution: Have The Conversation Early
No one enjoys thinking about health care needs for a parent who isn’t in a bad health. As awkward as it might be to bring it up, discussing long term care insurance needs to take place. The reason is simple: the earlier you start a policy, the cheaper the premiums will be. The later you start the policy, the more expensive the premiums will be. For most plans, as long as you continue making the premium, you won’t lose your benefits, which can add up quickly if you’re in need of specialized care in retirement.
If you’re not even sure where to start learning about long term care plans, Forbes has you covered. Their explanation of long term care plans will help you to wrap your mind around what generally is and is not covered.
The fact is that more and more Americans are having to take care of elderly parents, which can put financial strain on a family. Genworth recently did a study that said the average cost for a private room in a nursing home cost $77,745 in 2011. The only way that Medicare would consider paying for the room is if a person has spent most of their assets, leaving them nearly penniless during their last years in retirement. Establishing a long-term care plan can alleviate a lot of the financial stress if you or a loved one needs this type of care.
What advice would you give to someone about long-term care? Have you talked with your parents about long term care plans yet?