Retiree Corner: Covering the Cost of Long-Term Care

MedicineYou can save and plan carefully for retirement, but you could quickly spend down your savings if you need long-term care in a nursing home or from a caregiver in your home. The median cost of a private room in a nursing home is currently more than $100,000 per year. And the median cost of assisted living or a full-time home health aide is about $50,000 per year. Medicare covers very few long-term care costs, and Medicaid only pays if you’ve used up most of your savings. That’s why it’s essential to plan ahead for how you might cover these potential costs in retirement.

The cost of care can vary significantly by location. Research the types of care and facilities you prefer in your area and check typical costs. That may give you a starting point to estimate how much of those costs you could afford to cover from your savings and retirement income.

Consider ways to fill in gaps. You could buy a traditional long-term care insurance policy to cover a portion of the costs, which will pay out if you need help with at least two activities of daily living (such as bathing or dressing) or have cognitive impairment. You choose the daily or monthly benefit amount and the benefit period, such as three or five years. Adding inflation protection can increase your benefits to keep pace with rising care costs (3 percent per year is common).

Another alternative is to buy a life insurance policy that provides extra coverage for long-term care. These policies often require you to pay a lump sum or premiums over 10 years. You may be able to use three times the life insurance benefit amount to pay for long-term care, with similar benefit triggers as in a traditional long-term care policy. Money you use for long-term care is subtracted from the death benefit; but if you don’t need care, your heirs still receive the life insurance payout.

When deciding how to cover this significant line item in your retirement budget, it’s a good idea to compare several options. For more information about long-term care, see And explore price quotes for several long-term care insurance policy options at


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