As you are traversing your career path and the years pass, you may start to envision your retirement. You recognize the fact that you have developed a pretty significant nest egg through your 401(k) contributions, you have other investments, and you know that your house will be paid off when you start to receive your Social Security benefits.
Invariably, you probably envision the things that you will do when all of your time is your own. Many people have always wanted to visit certain places, and you may have the ability to travel to exotic destinations as you cross things off your bucket list.
Leisure activities like golf, tennis, and boating are important to some people, and you will also have the ability to spend quality time with family members who may live out of state.
When you are calculating your retirement budget, you probably have these active years in mind, and you may be well aware of the fact that there could be significant demands if you want to live the lifestyle that you envision. However, many people overlook three important facts that can have a very significant impact when you reach an advanced age.
Most Seniors Will Need Living Assistance
If you have taken good care of yourself throughout your life, you may assume that you will probably be able to handle all of your own day-to-day needs, even when you attain senior citizen status. While it is good to think in a positive way, you should also understand the facts so that you can act in a practical and pragmatic manner when you are looking ahead toward the future.
There is a very valuable website that you may want to visit when you are devising your retirement plan that is called LongTermCare.gov. This site is maintained by the United States Department of Health and Human Services.
One very compelling statistic greets you when you visit the website: Approximately 70 percent of people who are turning 65 on any given day will need help with their activities of daily living at some point in time.
This is the first inconvenient fact that can impact your retirement plan. Before everything is said and done, you will probably need living assistance, and you may ultimately reside in a nursing home or assisted living community.
Long-Term Care Is Very Expensive
If you are under the impression that you can absorb long-term care costs out of pocket without seriously damaging your financial legacy, you should understand the facts. Long-term care costs would in fact wipe out many Americans who retired with a reasonable store of resources.
An interesting study has been conducted by Genworth Financial. They have taken the time to examine the state of long-term care costs all around the country, and they actually drill down to metropolitan areas within each state.
We practice law in Essex Junction, Vermont, which is right outside of Burlington. According to the survey, the median annual charge for a private room in a Burlington area nursing home is over $122,000. This is about $17,000 more than the statewide median. We should point out the fact that things will get worse before they get better, because the survey is predicting a three percent per year increase in nursing home costs in Burlington over the next five years.
A government survey estimates the average length of stay at around two years and three months. One out of every 10 nursing home residents will require a minimum of five years of nursing home care. If you do the math, two to five years at over $120,000 per year is quite a bit of money.
Medicare Does Not Pay for Custodial Care
It would be logical to assume that your Medicare coverage will pay for a stay in a nursing home or assisted living community. Since Medicare is intended to help seniors pay for expenses that they are probably going to incur, this makes sense, but the hard truth is that Medicare does not pay for custodial care.
If you ever reside in a nursing home or assisted living community, Medicare will not help with the costs.
Explore Nursing Home Asset Protection Solutions
As you can see, nursing home costs can consume all or most of what you intended to leave to your loved ones after you pass away. The facts that we have shared here are disturbing, but we can also pass along some comforting news: nursing home asset protection strategies can be implemented.
If you take the right steps, you may be able to give gifts to your loved ones so that you can qualify for Medicaid, which is a need-based health insurance program that does pay for long-term care.
Advance planning is key, because program rules are complex. To get all the facts, click this link to download our free special report on the subject: Free Medicaid Planning Report.