Too Many Retirees are Overlooking the Cost of Long-Term Care

While most of us are aware of the importance of saving for our retirement, when it comes to the knitty gritty details of what we are actually saving for, things become a bit hazy.

Case in point: Healthcare, which we discussed yesterday. That's one line item that's expected to cost today's retirees up to $300,000 over the course of their retirement.

But the other factor in retirement planning that's often going overlooked is long-term care. No one really wants to think about it, but the price of care can really add up.

What it Could Cost You:

According to the U.S. Department of Health and Human Services, the majority of people over 65 will eventually need help managing their daily lives in the form of long-term care. Men usually need this for 2.2 years on avearge, while women need 3.7 years. And even that isn't cheap.

1/3 of retirees will spend time in a nursing home where the median cost of a private room is now more than $100,000 per year.
At-home care is cheaper, but will still run you at least $50,000 annually.
Half of all retirees over 65 will incur some sort of long-ter care costs, with 15% of those topping out over $250,000 in total.

No One is Paying Attention:

According to a survey by Edward Jones in Canada, 61% of people there consider health and long-term care to be key retirement priorities, which is good news, but 66% of them said they have "limited to no understanding" of what the options are and what they might actually cost in retirement.

Don't Look to Washington for Help:

Yes, the Biden Administration’s American Jobs Plan is looking to expand federal funding for home and community-based long-term care services by $400 billion. But that doesn't mean it will be enough to forgo private retirement planning. In fact, even if this plan goes through, many retirees will be too well-off to benefit, only highlighting the need for comprehensive long-term care as part of the pre-retirement planning process.