In Your 50s? Here's Why You Better Be Thinking About Long-Term Care Now

As you close in on retirement, most of your financial-planning attention is likely going toward hitting your retirement savings goals. However, you may have forgotten to model in enough savings for one very important -- and costly -- retirement expense: long-term care. If so, then now is the perfect time to sit down and rework the numbers.

Costly and increasingly common care

The average American who makes it to retirement these days is living into their 80s, and while that's great, there's a flip side to consider, too. Longer lives mean Americans are forking out an increasingly larger fraction of their retirement savings for healthcare.

According to HealthView Services, the average person who is now 10 years from retirement will spend an estimated $463,849 on healthcare during their retirement.

That's a staggering amount of money, especially when we consider that the average worker now enters retirement with about $130,000 socked away.

But what makes that figure even more astonishing is that it doesn't include the costs of long-term care, such as the kind provided by assisted living facilities or nursing homes. According to HealthView, factoring in spending on long-term care during the final two years of a person's life can cause annualhealthcare spending to spike by seven-fold.

Since conditions that more commonly require long-term care, such as Alzheimer's disease, are most often diagnosed when we're older, such care -- and the bills for it -- appears to be in the cards for most of us. That's because expenses for custodial and personal care aren't covered by Medicare, Medigap, or private health insurance plans.

Medicare Part A covers hospitalization expenses, and some costs associated with a short stay in a skilled-care facility following hospitalization. It may also cover some home healthcare expenses. But expenses are covered only if they are medically necessary following an illness or injury that required hospitalization for three days or more, and only if the patient is admitted to a facility for that care within 30 days of their hospital stay.

Private insurance and Medigap also fall short. Medigap plans pay Medicare co-payments, co-insurance, and deductibles, such as the Part A hospital deductible and the 20% co-insurance for doctor visits covered under part B. However, Medigap plans don't cover costs associated with long-term care. The same is true for Medicare Advantage plans.

Since traditional health insurance isn't picking up the tab for long-term care, you're going to be stuck footing the bill. That's an onerous proposition. Assisted living and nursing homes cost an average $43,539 and $82,125 per year, respectively, and at those rates all but the deepest pocketed among us will see their retirement nest egg wiped out.

Image source: Flickr user Robert Couse Baker

Making decisions now

The prospect of paying for long-term care is daunting, but there are things you can do now that may help you and your family with those expenses later.

For example, long-term care insurance is available, and while plans can cost thousands of dollars annually, securing a plan in your 50s will be cheaper than trying to get coverage after you retire.

Long-term care insurance plans require medical underwriting, so if you're in good health when you apply, you can get health discounts that can be locked in now to lower your premiums down the road. According to the American Association for Long Term Care Insurance, over half of applicants in their 50s qualify for these discounts, but less than a quarter of people in their 70s do.

Applying for long-term care insurance in your 50s also significantly increases the likelihood that your application will get approved. Roughly 86% of applicants in their 50s are approved for coverage industry-wide, but the approval rate falls to 55% for people in their 70s.

Tying it together

If you can afford to set aside enough money to pay out-of-pocket for long-term care shoudl you need it, great. But, if you're already worrying that you may outlive your retirement savings, taking action to address that potential need sooner rather than later could have an important and long-lasting impact on your finances as you move into your golden years.

The article In Your 50s? Here's Why You Better Be Thinking About Long-Term Care Now originally appeared on Fool.com.

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