A Fidelity Investments study reveals some of the statistics and long term care costs that the American family will incur. In just 10 years, approximately 50 million Americans will be over the age of 65. More than half of them will require at least one year of long-term care (LTC), and 20 percent will require more than five years of care before they die.
Presently, between 75 and 80 percent of all long-term care given in the United States is provided by a family member. Currently, they find that 29 million Americans provide informal long-term care to family members and spend an average of 34 hours per week doing so.
To illustrate the potential financial burden that such home care can mean, Fidelity estimates that a 50-year old Baby Boomer, who is earning $50,000 annually, and ends-up providing a total of four years of long-term care to a family member, could lose more than $140,000 in wages, retirement plans, and social security over his or her lifetime.
When, finally, a nursing home is required, long term care costs jump considerably with the average cost of a one-year stay in a private room in a nursing home estimated at nearly $80,000. Clearly the cost of long term care can be devastating to family assets. Note that long term care cost at home can be even more expensive than a nursing home.
LTC Insurance appears to be the way to go.
The earlier you purchase LTC insurance, the less expensive your premiums will be. But for a 65 year old couple, Fidelity Investments estimates they need $85,000 to insure against long-term care expenses -- a significant amount of money.
However, purchasing long-term care insurance gives benefits that go beyond just protecting your assets. Insured individuals can benefit from increased choice in the location and quality of their long term care. When looking for a policy, consider a benefit period of at least 2, but no more than 4 years, for each person since 90% require less than 4 years.
Thinking that long term care cost will be paid for by the government, taken care of by family members or by ignoring the problem is a mistake.
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