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Good news! Thanks to better medical care, diets, and more exercise, people today are living longer than any generation before them. People often imagine all of the wonderful ways in which they will enjoy their retirement years...all too often failing to consider the later years of retirement. Commonly, these years are assisted with long-term care in nursing homes.
So, this good news of us living longer comes with a down side. According to a recent survey, nursing home costs now average about $168 a day—$61,320 a year1. That is about 10% more than two years ago. Expenses such as these can have a devastating impact on your retirement savings. Many people over 65 erroneously believe that Medicare will pay most or even all of their nursing home bills, or that their HMO will pick up the cost. That’s simply not true. And, the result is that many people are surprised to discover they will have to pay the greater portion of these costs out of their own pockets.
Many consumers do not understand that Medicare and Medicaid provide only limited financial assistance with long-term care needs. While Medicare will cover up to 100 days of skilled nursing home care per benefit period, after 20 days beneficiaries must pay a coinsurance fee. In 2001, that coinsurance fee was about $101.50 per day1. Medicaid provides financial assistance for approximately 70% of nursing home residents, but some are required to deplete their assets before the program will pick up the bill for their care.
The cost of nursing homes, long-term care, retirement communities, and other independent living facilities is extremely variable. It’s important that you research all of these costs and factor them into your retirement planning.
1 Source: MetLife General News: Press release. April, 2002.
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