A. According to the U.S. Department of Health and Human Services, 7 in 10 people over the age of 65 will require long term care. This compares to a 1 in 340 chance of a major auto accident and a 1 in 1,200 chance of a total loss from a fire. About half the people reaching the age of 65 are expected to enter a nursing home at least once in their lifetime.
The cost of long term care is expensive. The median cost of a private room in a nursing facility is $7,500 per month, an assisted living facility $3,600 per month and home care $3,800 per month. If you are 55-years-old expect to pay almost three times those amounts when you are likely to need care 25 years from now at the age of 80. Based on the average nursing home stay, total costs are expected to reach approximately $720,000 per person — easily wiping out a lifetime of savings for many families.
So, what should you do? You have 3 ways to cover your long term care needs.
2. Purchase long term care insurance
3. Purchase long term care and life insurance combo
Let's use numbers to illustrate -
Two 55-year-old couples: the Millers choose to self-insure (invest) for their long term care costs, while the Smiths choose to insure. Unfortunately, each couple will likely need long term care for 5 years in a combination of locations; including a nursing home, an assisted living facility and their own home. The only saving grace is that their costs may only run at $300 per day or $9,000 per month per person.
In our next blogpost, we will compare the three options' advantages and disadvantages.