The financial consequences of a long life

It’s not everyday that you get to lie in bed and think about the meaning of life. Sounds indulgent, right? Well, unfortunately, that’s not exactly how things went down.
For the first time in many years, I found myself with a diagnosis of bronchitis. How bad is that, you ask? Well, it absolutely knocked me out (and I mean down for the count). Lest you think I am being dramatic, let me assure you that this left me incapacitated, helpless, and, most importantly, confined to my home for about a month. Which, of course, translated into a lot of organizing, cleaning and, most importantly, thinking.
Though I tried to tackle this plague with a little humor and, I admit, some serious self-pity, I couldn’t help but think about the gravity of a real illness – one that is not so easily resolved. During this time, I spoke to a dear friend who was diagnosed with lupus in his 20s. he shared with me the challenges of the disease. Major things like very low white blood counts for long stretches of time. If I felt so debilitated after 30 days of a relatively mild illness, how does someone with a more serious condition feel? Just yesterday I told him how much I thought about him and how much perspective our conversation gave me, especially as a financial planner who likes to … well … plan ahead.
The truth is, facing medical challenges in life, whether they are acquired at a young age or later in life, can turn your world upside down. Knowing the havoc that bronchitis wreaked in my own life, for only a month, I am more committed than ever to planning ahead for my own future and that of my clients. I want to know that if I ever get sick, I can focus on healing my body and soul, and not worry about the financial burden of medical care.
This issue affects everyone. 70% of people turning age 65 can expect to use some form of long-term care during their lifetime. Approximately 44% of people reaching age 65 reside in a nursing home at least once in their lifetime and 53% or more will stay there for a year or more. A whopping 37% of people receiving care are under the age of 65.
Of course, the cost of care varies by state, by type of care needed, the length of care and the care provider used. According to the U.S. Department of Health and Human Services, the average cost for a private room in a nursing home in 2010 was $229 per day, which adds up to $83,585 per year. We take such care to save for our children’s education. Why not start planning for something that is sure to cost even more?
One of the biggest discrepancies I see in financial planning is the lack of attention to long-term care. Even those who have carefully planned for retirement sometimes omit this critical element in the planning process. Although many of us do not anticipate having medical problems later in life, sometimes an unexpected illness or condition rears its ugly head and nothing depletes your retirement fund faster than long-term care. And for women, this is a critical issue as they often tend to outlive their spouse by 14 years.
There are several options for those who want to be thoughtful about their future:
1. Self-insurance
2. A stand alone policy for long-term care
3. A combination life policy with a Long-term care option
4. Medicaid (which comes with its own set of very strict program rules)
These are all options to discuss and think carefully about when planning for your retirement. Check out these articles for more information and start planning!