When planning for the future, older adults should take time to understand their risk of experiencing a serious cognitive disorder or physical disability, and how these conditions could impact their finances.
A majority of Americans age 65+ (almost 70%) will need some form of long-term care in their lifetimes. Of that 70%, 1-in-5 will require care for more than 5 years.1
age 65 and older has Alzheimer’s disease today — about 5.5 million in all. By the middle part of this century, a new case of Alzheimer’s will develop every 33 seconds.2
1. “How Much Care Will You Need?” LongTermCare.gov. U.S. Department of Health and Human Services. https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html. Web. 21 October 2017. 2. 2018 Alzheimer’s Disease Facts and Figures. Alzheimer’s Association. https://www.alz.org/media/HomeOffice/Facts%20and%20Figures/facts-and-figures.pdf, pages 17 and 22. Web. 2018.
Consider this hypothetical scenario…
You’ve reached retirement at last! Because you were thoughtful about your future, you’re comfortably living on an annual income sufficient to cover all your living costs. Suddenly, you experience a chronic illness or a physical disability and require long-term care at home, in an assisted living facility or in a nursing home. From this point on, you’ll need a significant increase in income to fully cover your expenses. You were prepared to live comfortably through your retirement years. How could you manage to come up with enough to cover these new expenses?
A scenario like this one — called the great retirement income gap --
can be triggered by common conditions like diabetes, heart disease and
Alzheimer’s. The gap also can occur simply when someone needs daily
assistance as a normal part of aging.
The great retirement income gap
Can you earn enough in interest on your current assets to cover your long-term care costs, which could extend for 5, 10 or 15 years — or longer?
Resolve your concerns
Closing the retirement income gap
If you should need long-term care in retirement and your living expenses skyrocket as a result, what would you do? Do you have the resources today to close the retirement income gap? Your first thoughts might be to liquidate assets in managed accounts, annuities and cash equivalents. Yet the ongoing costs of long-term care are resolved with income, not assets.
Long-term care can impact your retirement plans
Nobody expects to have health concerns in retirement. Even so, the risk is real and present. One solution is to create a financial strategy for retirement that includes benefits for long-term care.
