What Long-Term Care Insurance Is (and Why You Might Want to Consider It Now)
Buy now, get the care you need later.
The standard approach to saving for retirement tends to be acquiring a large pot of money which you then invest (ideally in a tax-advantaged retirement account). What many retirees (or those soon to retire) soon realize is that the same pot of money that you use for food, vacations, and property tax after leaving the workforce will also have to fund the cost of long-term care in your later years, should you need it.
A study by the U.S. Department of Health and Human Services estimates that half of the population will require long-term services and support—such as an in-home caregiver or residence in an assisted living community—if they reach age 65. The average costs of those services will be about $140,000, but for many Americans the number will be much higher.
"It's a point in our life none of us wants to get to actually, but the cost of long-term custodial care can literally wipe out a couple's retirement savings," says Terry Savage, a nationally syndicated financial columnist and author of The Savage Truth on Money.
Long-term care (LTC) insurance offers a way to prepare for in-home nursing care or extended stays in assisted living facilities—even adult day care—all while protecting your nest egg. Rather than spend your hard-earned money on these costs, your long-term care insurance will cover it.