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How much money will you need in retirement? To arrive at an estimate, you should consider various factors, such as where you’ll live, how much you plan to travel, and so on. Not surprisingly, you’ll also need to think about health care costs, which almost always rise during retirement. But there’s one area you might overlook: long-term care. Should you be concerned about these costs?


In a word, yes. Expenses for long-term care – which can include receiving assistance at home as well as prolonged care in a facility – can be surprisingly expensive. Consider the following statistics, taken from the 2016 Cost of Care Study issued by Genworth, an insurance company: 



• The average annual cost for a private room in a nursing home is more than $92,000. And in some places, particularly major metropolitan areas, the cost is considerably higher. 
• The average annual cost for full-time services of an in-home health care aide is more than $46,000.

These costs are certainly daunting. Of course, you might think that you won’t have to worry about them, because you won’t ever need any type of long-term care, particularly if you’ve always been in good health and your family has no history of later-in-life cognitive impairment. However, the odds may not always be in your favor, because almost 70% of people turning age 65 will need some kind of assistance or long-term care at some point in their lives, according to the U.S. Department of Health and Human Services.

Given the costs of long-term care, and the possibility that you might really need this care, how can you prepare for the costs?


Things may change in the future, but at this point, you really can’t count much on government programs to help pay for long-term care. Medicare typically pays for only a small percentage of these costs, and, to be eligible for Medicaid, you must have limited income and assets. In fact, you might need to “spend down” some of your assets to qualify for Medicaid long-term care services. Obviously, this is not an attractive choice, particularly if you’d like to someday “leave something behind” to your family or favorite charity.

Consequently, you need to look at your options for paying for long-term care – just in case. You could earmark a certain percentage of your investment portfolio to cover long-term care costs; if you never need this care, you can simply use the money to pay for other areas of your retirement or for other purposes, such as charitable gifts or financial support to your grown children or grandchildren.

Or, as an alternative, you might want to work with a financial professional, who can recommend a strategy specifically designed to help you address long-term care costs. The marketplace in this area has evolved rapidly in recent years, so you should be able to find a solution that is both affordable and effective. Keep in mind, though, that the earlier you purchase a long-term care solution, the more economical it will likely be for you.


In any case, don’t delay your planning for long-term care. Knowing that you’re protected against potentially catastrophic costs can make your retirement years less stressful for you and your family.


This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.