Should we be planning for an empty nest… or worried about an empty nest egg?!
Here at the Bobbi Decker Real Estate Team, we hope that you are enjoying summer as much as we are! Maybe it’s the shine of those sunbeams off of the water or the fact that we are halfway through the year, but this always seems like an ideal time to reflect on where you have been AND where you are headed. An article published just last month in the daily Retirement Scan focused on a topic that impacts nearly half of Baby Boomers… and has much to do with what your financial plans for retirement have been and what you may wish to reconsider: the costs of long-term care.
According to the Insured Retirement Institute, one-third of seniors did not save for long-term care because it was not a priority. Motley Fool reports that 46% of Baby Boomers do not have enough saved to adequately cover the costs of long-term care because they assume these expenses can be covered by Medicare; 72% of Americans have reported that they do not understand how Medicare works.
At this point, you may be wondering how much long-term care really costs. According to the Administration On Aging (a sector of the US Department of Health & Human Services), the national average for a semi-private room is $225/day or $6,844/month. Private rooms average $253/day or $7,698/month while additional services such as health aides and adult day cares average $20.50/hour to nearly $70/day. In California, annual costs for long-term care averaged $110,000 annually as of 2017, according to the California Partnership For Long-Term Care. The same source reported that on average, individuals need two years of long-term care, while 1 in 5 people will need such services for longer than 5 years.
These staggering costs are likely to make you question… what’s the answer to affording such needs? According to Financial Planning (the network for financial advisors), working Americans saving for retirement should talk to their trusted resources about “building a diversified portfolio, developing the right investment attitude and constructing a financial plan with a clear set of goals.” Other options include working in retirement, downsizing before you ‘need to’, strategically selecting when to file or suspend Social Security benefits, purchasing long-term care insurance and utilizing a self-insuring calculator to help you plan for costs of care.
*** Please note that this article is for informational purposes only and is not intended to serve as financial guidance or advice. Please speak with your financial advisor, tax professional and estate attorney to understand your options and how they impact your personal wealth, tax status and personal well-being.
All my best,
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