Even though they say the best things in life are free, just about everything else comes at a price. Even aging: As Americans enter retirement they have to grapple with the rising costs of health care. Whether seniors receive home care or enter assisted living, understanding the costs is essential to planning out the golden years.
Left without a financial plan for the future, seniors could face challenges to paying for care — a particularly risky situation given costs continue to increase year over year without abatement. Yet while the subject is a sensitive one to broach in retirement planning, it's important to take a look at savings, lifestyles and care needs. With this honest appraisal, seniors and their families can more effectively plan out a high-quality retirement that gets them the care they need.
Most unable to predict costs
"63 percent said they were concerned about paying for long-term care."
The difficulty in preparing financially was recently underscored by a Nationwide Retirement Institute survey on the costs of long-term care. While there's a 70 percent probability an individual will need long-term care at some point after turning 65, about two-thirds couldn't estimate the costs they might encounter should they need such care. What's more is 63 percent said they were somewhat or very concerned about their ability to pay for these expenses.
The biggest obstacles seniors may face in preparing for retirement is this lack of clarity regarding long-term care costs. You don't necessarily have to crunch the numbers so much as do some general research to define the costs of various types of care. From this baseline, seniors can more accurately understand their financial standing in context of long-term care costs and identify any potential gaps or problems.
Understand what Medicare will and will not cover
Medicare is a critical resource for all senior Americans, but it won't pay for everything in retirement. While Medicare parts A and B — what's sometimes referred to as Original Medicare — will cover hospital and medical expenses (and to a limit some nursing care), it does not include long-term care. Many seniors may be surprised to learn this, which underscores the importance of educating yourself on the costs of care.
Assess your assets
In preparing to pay for long-term care, seniors ultimately have to understand what sources of income and savings they have. The first place to start is your personal assets, this includes whatever deposits you have in the bank, investments you can tap and other liquid assets that can be converted to cash. One interesting source for seniors to consider is their home. The costs of assisted living and home care are a lot more comparable than many may expect, and if seniors opt to enter a retirement community they could even save money on long-term care. In this scenario, proceeds from a home sale could be a big chunk to put toward care.
Whenever preparing for the costs of care, it's important for seniors to consider all their options. Talking with Edgewood during this the planning process can help seniors and their families find an optimal community that offers high-quality care services and retirement experience.