Have you ever wondered, what in fact does long term care cost
in the home? It is an unappealing prospect for many and so often is left unaddressed in planning.
There we usually talk about the cost of a nursing home. But that is not what many (most?) people in fact do. They are reluctant to go into a nursing home and are generally more inclined to
"age in place" and remain in their home to the end of their lives. So, while living out that plan, if you become unable to care for yourself and want to remain in your home (in your community, near your friends, with your spouse or partner), what would it cost to bring in the care you'd need?
The Cost
The answers are on the price sheet below, generously provided by our new friend, David Robinson, of
www.alwaysbestcareboston.com. The price is $24 - 28 / hour. Thus, you can have someone come into the house during the day to provide the services listed on the sheet, and the total is $224 / day (8 hours), which works out to
$82,000 / year. These are Boston area prices. The farther you live from a cosmopolitan area the lower the cost is likely to be.
The Plan
As planners, we always plan for the worst-case scenario. So, if someone needs round-the-clock care, as is often the case, the best solution is to have someone live in the house. Here the cost is
$300 / day, which works out to
$110,000 / year. You may think that it would cost less to go into a nursing home, but my understanding is that the price of a stay in a nursing home is higher still.
The way we plan for this with our clients is to figure on three years of such an expense at some point in their lives. So, for a couple, that is
$110,000 x 3 x 2 = $660,000. Here one person needs the care for 3 years, and then the other member of the couple needs the same care. It is unlikely that this will happen, but risk management involves planning for unlikely eventualities.
The Cost of In-Home Long Term Care
|
Per Hour
|
Per Day
|
Per Year
|
|
8 hours / day
|
$24 - 28
|
$224
|
$82,000
|
|
24 hours / day
|
|
$300
|
$110,000
|
An Attractive Solution
I must say that when I put that number into our planning software, the retirement income plans of many of our clients take a pretty big hit. The more I run these analyses, the more attractive long term care (LTC) insurance becomes. Here I include in annual expenses the cost of insurance. Thus, if our client spends
$70,000 / year (after taxes) in normal retirement expenses, we increase that to
$76,000 to include the cost of LTC insurance. We still include some long term care cost, because the insurance doesn't usually pay the whole freight. But this way
our client's plan is significantly enhanced.
Not everyone needs
long term care insurance,
but everyone needs
a long term care plan.
A Handful of Resources
Here are a couple of related websites that may prove useful, thanks to Patricia Sarmiento of
www.publichealthcorps.orgAnd below are some links that deal with senior health and well-being, thanks to Marie Villeza of
www.elderimpact.org. According to the U.S. Surgeon General's Report on Physical Activity and Health, inactive people are nearly twice as likely to develop heart disease as those who are more active.
Explore these resources to learn about the benefits of exercise, the dangers of inactivity, and helpful tips on getting started. Click on any of these topics to open their web pages.
