The realities of old age and medical costs

“Your father and I have worked too hard to save up this nest egg. I hope we don’t have to spend it all on healthcare expenses in our old age.”  

Those were the words from my Mother in the early 1990's when my parents began thinking about how to plan and pay for healthcare expenses in their old age. One way to protect your nest egg is through the purchase of a long-term care insurance policy (LTC.) We all know the statistics of getting older and healthcare expenses. About seven in 10 Americans (69%) turning 65 will need, at some point, a form of long-term-care service. That might be in a home, in their community, or in a facility. * And while one-third of 65-year old's may never need long-term care, 20% will need it longer than five years. A long-term care policy is designed to pay for the medical expenses Medicare doesn't pay for. 

Your alternative is to roll the dice. You could choose not to have long-term care protection and hope either your nest egg can handle old-age medical costs, the kids will take care of you, or you will die before you get sick. God forbid you (or your spouse) are diagnosed with Alzheimer’s, or something similar, which would bankrupt any middle-class American family.  

So, my parents bit the bullet, reduced their living expenses, and began to pay monthly on two, long-term care insurance policies. Fortunately, 10 years later when my Father was diagnosed with Parkinson's disease, and toward the end of his life when care in his community facility exceeded $6,000 a month, the combination of his social security and LTC benefits covered the cost. Saving the family nest egg was achieved in his lifetime. As I write this story, my Mother is going on three years in an assisted-living facility in Texas at a monthly cost of $5,000. So far, the LTC benefits and her social security are covering her care. Will she achieve their goal of saving the family nest egg? Only time will tell.  

An excellent website to check-out and begin planning for old-age medical costs is sponsored by Genworth Financial. I researched the average cost of an assisted living facility in Pasadena, California and found it to be $4,500 a month. A private room in a nursing home came to be $9,125 a month.   

The long-term care policy industry has changed dramatically over the past 25 years. It’s not the solution for every family or situation but planning for healthcare expenses in retirement should be part of any financial plan.  

 - Robert Bullock