Can You Afford the Elder Care Journey?

Retirees do not realize how much they will need to cover out-of-pocket medical and long-term care costs, and that government aid is often not available. A 3-year stay in a nursing home may cost $252,000.

Few of us will simply fall into perpetual sleep one night. In fact, 90% of us will need help with the activities of daily living at some time in our lives, resulting from one or more chronic conditions. This is called the Elder Care Journey. Many of us will start with home health care and then decline into either assisted living or nursing care.

The costs of these care settings vary. Typical costs are:

• Home Health: $2,800 per month

• Assisted Living: $3,400 per month

• Nursing Home: $7,000 per month

Unfortunately, your pre-crisis ordinary living expenses will in most cases also have to be paid, such as the cost to heat your home, pay property taxes, and other costs.

Monthly Income Analysis

1. Social Security Benefits: $_________

2. Pension Benefits: $_________

3. Other Income: $_________

   Total Monthly Income: $_________

Ordinary Living Expenses (OLE): $3,100.00 

	Home Health	Assisted Living	Nursing Home
Income
Ordinary Living Expenses	$3,100	$2,100	$2,100
Cost of Long-Term-Care	$2,100	$3,400	$7,000
Shortfall or Surplus
Available Long-Term-Care Insurance Coverage

PROJECTED COST OF SHORTFALLS FOR 3 YEARS

A typical time in long-term care is 3 years. Based on this, the projected shortfalls, if any, are:

1. Home Health Care: $100,800.00

2. Assisted Living: $122,400.00

3. Nursing Home: $252,000.00

RECOMMENDED PLANNING

• Purchase Long-Term-Care Insurance

• Protective Deed for Home

• Protective Deed for Other Land

• Transfer to Protective Trust

• Other Ideas

Notes:

1. A 2006 report by the AARP found that Baby Boomers have no idea how much they will need to cover long-term-care costs and are financially unprepared to cover them (www.aarp.org). A 2008 study by the Fidelity Insurance Company found that a 65-year-old may need $225,000 to cover uninsured medical costs and additionally will need to pay $85,000 for long-term-care insurance, if desired.

2. When you enter a facility, the cost of maintaining your home decreases.