When people in California plan for retirement, they might believe they have effectively organized all of their financial matters. However, they may have overlooked the very real and costly expense of long-term care. A recent survey indicated that most Americans fail to account for the high costs of care for seniors.
The report indicated that while more than 56 percent of respondents thought that private nursing home care cost less than $75,000 annually, it actually costs more than $81,000 yearly for a semi-private room. If the person seeks a private room, the cost skyrockets to more than $90,000 each year. Since people underestimate the cost, they are not saving enough to prepare for the future. In New York City, the cost for a semi-private room jumps to more than $141,000, which means that a person could feasibly have their projected savings eaten up about twice as quickly as they anticipated. Furthermore, the data shows that 40 percent have saved nothing for elder care while 67 percent have saved less than $75,000. While Medicaid helps, in order to qualify a person must have little, if any, net worth. Choices regarding facilities are limited, and a private room might not be covered.
In addition, people did not understand the difference between assisted-living facilities and nursing homes. They thought the two were very similar, but a nursing home can cost about twice as much as an assisted-living facility. When people understand this, they might be able to stay longer in an assisted living and save their money.
The costs of assisted-living and nursing-home facilities can eat up much of a person’s estate. An elder law attorney might be able to help a client adjust their portfolio to better prepare for anticipated long-term care needs.
Source: The Motley Fool, “Most Americans Underestimate Nursing-Home Costs“, Richard Barrington, June 29, 2014