“Okay, here’s my retirement income and here’s how much it would cost to go into a nursing home.”
It is easy to underestimate the need to plan when you are younger for long-term care costs when you are older. Many people look at their retirement income in relation to long-term care costs when they retire at age 65. But, a lot of people often neglect to take in account for the rising cost of healthcare needs as they age.
What happens to long-term care costs as we age from 65 to 70 to 80 or older?
In this Elder Law Minute, Wes Coulson, Illinois Elder Law attorney, shares an important history lesson and explains the best way to assess this risk is by looking at our retirement income in relation to how much long-term care costs increase as we age past retirement.
Retirement Income vs. Long-Term Care Costs: A History Lesson
Hi, I’m Wes Coulson and this is your Elder Law Minute. Today I want to share an important history lesson with you that I think is very instructive in telling you how it’s easy to underestimate the need to plan when you are younger for long-term care costs when you are older.
Let me tell you what has happened, or show you what has happened, to a lot of people who in years past have assessed this risk. What they’ve done is when they’ve retired at around age 65 they’ve looked at:
“Okay, here’s my retirement income and here’s how much it would cost to go into a nursing home. You know, the difference is really not that great. We don’t need to do planning because even if that happens we’re okay, we have enough savings, we can afford it.”
But then, what happens over time when you hit age 70, 75, 80 and 85? Well, your retirement income creeps up. What have we had the last two years in Social Security? No increase and a 0.3 percent increase. Pensions and retirement plans a lot of times those are fixed numbers. So, that number stays like that.
But, what happens with long-term care costs? Well, what happens with them is the same as what happens with other healthcare costs these days and that is that they keep going up significantly every year at a rate that’s much higher, unfortunately, than the rate of inflation. So, what happens is when you get into this range, age 80 to 85, the gap between the income that you have available to pay for that care and what that care is going to cost you becomes so great that covering it threatens, for most people, to exhaust their life savings.
So, the lesson of history is pretty clear. You don’t just look at this end of the chart in assessing your need. You’ve got to play these numbers out and see what this is going to look like at the time that you’re actually going to have to pay for long-term care. Thanks.
For more information on the retirement and long-term care costs, visit these articles:
- Health Costs May Gobble Up Social Security Benefits
- Long-term Care Costs: The Biggest Threat to Your Financial Future
- Americans Falling Woefully Short on Retirement Savings
“Your Trusted Advisor on the Elder Care Journey”
Dent-Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Dent-Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (877)995-6876 or Contact Us and we will get in touch as soon as possible.