Why is it so important to plan for long term care
Many seniors consider planning for their long term care to be akin to planning for their final days. Wouldn’t any one of us push back on such a task or deny that it will ever be needed? The problem is we are emotional human beings that often ignore facts and statistics, even to our own detriment.
Let’s consider the act of planning for our children’s college by starting a savings account, yet we know not all children go to college. Why do we have homeowners insurance, and yet most of us don’t know anyone who actually had their house burn down. And when was the last time you actually used an umbrella, but you probably own at least a couple, just to be prepared. Planning is something we do naturally, but not when it comes to our later years.
- We know Baby Boomers are turning 65 at a rate of 8,000 – 10,000 per day. (Pew Research)
- According to AARP, on average, 52% of people who turn 65 will develop a severe disability that will require long term care at some point. The average duration of need, over a lifetime, is about two years. (March 2017 report)
- We know Medicare does not pay for long-term care.
- We know in 2015 the U.S. General Accounting Office estimated the median savings for households age 65-74 to be just $148,000.
- We know that the average annual cost of a skilled nursing home stay is $91,250. (2016 study by Genworth)
- Last but not least, in 2015 the GAO found 52% of all U.S. households age 55 & older have NO retirement savings.
While you may be the lucky one who is right when you say “It will never happen to me,” the odds are definitely not in your favor that you won’t need some long term care assistance. Just stop and think about how many family and friends you have who are much older than you or living longer than they ever thought they would. So the real question you need to consider is – what to do next? Putting your head in the sand is not a planning process recommended by anyone I know. And though you may be chuckling at that image, all too many seniors are doing just that.
by Rick Gow, CSA
Certified Senior Advisor & Wealth Management Advisor
with Lara, May & Associates, LLC. Member FINRA/SIPC