People who live to age 65 will have a 70% chance of needing some form of long-term care, and in the United States, the rising cost of these services is outpacing inflation.
People who live to age 65 will have a 70% chance of needing some form of long-term care service, the cost of which is rising incredibly fast, according to a report from Genworth.
In the United States, the rising cost of long-term care services is outpacing inflation. The median annual cost for care in an assisted living facility ($42,000) has increased by 4.27% annually over the last 5 years.
"With the number of Americans over 65 projected to double over the next 40 years, continued increases in the cost of care and limited public financing options available to cover these costs, long-term care is one of the most important social issues of our time," Tom McInerney, Genworth president and chief executive officer, said in a statement.
Genworth estimates that when many baby boomers require long-term care services roughly 25 years from now, it will cost $840,000 for the average 3-year stay at a private nursing home. This cost is far more than most people would expect during retirement.
The cost of a private nursing home room is the most expensive in Alaska, by far, according to the data from Genworth. While the median annual cost in the US is $87,600, in Alaska the median annual cost is $240,900. On the other end of the spectrum, that same care would cost $57,860 in Oklahoma.
Most Americans underestimate the cost of healthcare during retirement, and these long-term care costs are something they aren’t considering. As it is, Fidelity projects that the average couple will spend roughly $220,000 in healthcare expenses during retirement.
“For the vast majority of Americans, long-term care costs are not covered by Medicare and Medicaid provides coverage only after lifelong savings have been nearly exhausted,” McInerney said. “Given these factors, private long term care insurance remains one of the most effective ways for Americans to prepare for this potentially significant expense later in life.”