A large percentage of Americans will need long-term care at some point in their lives. But many are unprepared for the financial burden of that care.
I recently attended the annual conference of the San Diego Organization of Healthcare Leaders. This year the topic of the conference was on the growing aging population. The conference was called “The Boomer Tsunami.”
The good news is that boomers are living longer. The bad news is that many boomers are financially unprepared. You’ve heard me talk about the financial challenges in retirement brought on by taxes and inflation. But what happens when we get sick? First and foremost we have to provide the best healthcare possible to our aging population.
A big part of the conference was discussing all the wonderful changes that are coming in healthcare. Telemedicine and homecare will be a huge benefit for the boomer population, and the generations that follow. The advances being put forth in those areas are absolutely amazing.
Here’s the problem: How do we pay for it? During the conference, when the question of how to pay for home care came up, no one seemed to have a good solution.
Statistically 70% of Americans will need long-term care at some point in their lives, and 90% will not have the insurance to pay for it. For any couple that lives together long enough, there is a 91% chance one of them will require long-term care. Those numbers are staggering.
The solution is actually quite simple. First we need to look at nursing home costs. Nationwide, the average cost of a nursing home is $100,000 per year. The average length of stay in a nursing home is two and a half years. That’s $250,000. The solution is one of the following three things or a combination of them.
1. The most cost effective solution is to use a life insurance policy with a chronic illness rider. This is not always possible because of pre-existing conditions or age.
2. Build an extra $250,000 per person into your retirement plan.
3. Buy long-term care insurance.
It’s really not that difficult, if you start now and plan ahead. The last thing you want to do is nothing and then have to react when the need arises. If you do nothing and you are unprepared, it usually puts stress and anxiety on family members like your kids, who may have to help foot the bill.
You’re physicians; many of you see this happen to families every day. Remember the sooner you start, the easier this problem is to solve.
If you have questions, send me an email to David@TheAlemianFile.com. Check out my website PhysiciansRetirementPlan.com. Follow me on Twitter, connect with me on LinkedIn, and absolutely make sure you come back here next week to Physicians Money Digest for another edition of The Alemian File.