The long-term care insurance industry has seen its share of challenges in recent years, generating no shortage of negative headlines. But while such coverage isn’t for everybody, almost anyone planning for retirement ought to carefully consider whether they might need it—after all, burying our heads in the sand about our future care needs is hardly a good alternative.
If you’re assuming you won’t need help in your later years, you may be miscalculating. Most long-term care is not actually medical in nature, but rather involves assistance with activities of daily living such as bathing and dressing. Some 70% of adults turning 65 will need some help with such “custodial care,” including those with dementia who are otherwise physically healthy.
Medicare doesn’t pay for custodial care and will only pay for nursing-home stays in limited, short-term circumstances. Medicaid pays basic long-term care expenses, but only for those who have exhausted their assets. What’s more, this program is already under strain and shouldn’t be considered a fallback even for those who meet its stringent criteria, experts say.
What this all means is that a) most of us will need help toward the end of our lives and b) most of us will be on our own paying for that help, if we don’t have family or friends to do the work for us. And many financial advisers will agree that relying on family shouldn’t be the sole plan for our old age.
So what are we doing to prepare for this eventuality? Not nearly enough. Six in 10 workers report that they and/or their spouse have less than $25,000 in total savings and investments (excluding their home and any pensions), according to the 2014 EBRI Retirement Confidence Survey. Only 7.4 million Americans are covered by a long-term care insurance policy.
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