Aging can be a wonderful thing. As we age, we gain knowledge, experience, and memories that help us make decisions throughout our life. We learn new things every year at work and in life, we experience the beautiful feeling of interacting with our family and seeing our grandchildren, and we make memories with the people that we love doing things we are passionate about.
Aging also brings with it some changes, some of them good and some of them not so good. The cost of health care in retirement is one of those changes that is not so good and that few people are prepared for when the bill arrives. Planning for these changes can help people gain peace of mind and feel secure in their financial choices as they age.
Health Care Isn’t Cheap
Getting older usually means some of your costs go down; you’re no longer paying for your children’s expenses, to commute to work everyday, or the cost of college. It’s a comforting thing to watch your bills decrease over time, but there is one bill that might increase more than you think.
An annual Fidelity study estimates that the average 65-year-old couple retiring in 2013 will need $220,000 to cover health care costs throughout retirement. In 2012, the estimate was $240,000. Most people greatly underestimate how much money they will need for health care expenses in retirement, which can lead to serious financial problems down the road. Fidelity also found that 48% of Americans think they will need just $50,000 for health care in retirement.
Plan for Your Future Health
It makes sense that our health care costs would rise as we age. Generally, people become less healthy as they age and more susceptible to conditions that can disable them or seriously restrict their activities, like a stroke or Alzheimer’s. Still, though, we tend to not think about that kind of thing until it’s right in front of our faces, or in the form of a bill in the mail. It’s not something most people want to think about, but avoiding the subject usually does more harm than good.
Planning for your future health involves more than just thinking about it; it involves taking action. Without a plan in place to help you pay for your health expenses down the line, you may find yourself spending your hard earned assets on the cost of health care. Not exactly the ideal spending plan. Long term care is an especially pricey area of health care that can quickly take a huge toll on your nest egg.
Long Term Care
Long term care involves care that is required for an extended period of time and is received at home, an assisted living facility, or in a nursing home. Though long term care isn’t only for the elderly, the majority of long term care patients are older than 65, which is why long term care planning is often something that is decided upon during retirement planning.
The cost of long term care in Ohio is lower than the national average, but can still cause sticker shock if you aren’t prepared. A home health aide in Columbus, Ohio costs an average of $44,615 annually, while a year in an assisted living facility costs $48,600. A private room in a Columbus nursing home costs almost double that at an average of $87,053.
Without a plan in place to address these costs, they can quickly eat up your retirement savings if you or your partner need care for any reason. Even just a few months of care can use up thousands of dollars and once the care is completed, you are back at square one, as financially vunerable as ever. Long Term Care Insurance can shield your assets and help you avoid this kind of financial snafu should you ever find yourself in need of care.