We pass along a lot of information about estate planning and the financial strategies that can be employed to prevent asset erosion, but this is just one aspect of elder law. As the society grows older and people live longer new societal and legal issues are arising, and the entire paradigm of aging is changing before our eyes.
This is a far reaching subject worthy of much examination, because you can’t address something like the rising costs associated with long term care unless you place them in a broader context. Current statistics indicate that about 60% of people will need long term care at some point once they get beyond the age of 65.
But can all of these people afford it? In 2010 the average cost of a year in a private room in a nursing home was over $83,500, which is an increase of 4.6% over 2009 figures. The median income in the United States, when adjusted for inflation, has actually been getting lower as the cost of long term care has been rising.
So let’s say you are twenty years away from retirement, wages stay stagnant, and long term care costs rise by 5% each year between now then. You may not need the long term care for another 20 years after you retire. So you are looking at a 5% annual increase for the next 40 years in a figure that is now standing at over $83,000 annually while wages remain constant or reduced when adjusted for inflation.
There is no way that most Americans can save that much money given the current economic paradigm. The only viable solution would seem to be the purchase of long term care insurance. Though it is expensive, it does bring the cost of care within reach at this point in time.
The younger you are when you lock in your premium the more affordable it will be, and if you wait too long the coverage may not be offered. The wise course of action would be to research the costs of long term care and evaluate your financial capabilities. If paying these expenses out-of-pocket would place too much of a strain on your resources, purchasing long term care insurance may be a viable solution.