The variety of Americans who live past 85 is predicted greater than double in the subsequent 25 years, the Census Bureau projects, resulting in a surge in demand for long-term care.
Long-term care involves helping an older adult manage activities of day by day living, encompassing every little thing from grocery shopping and preparing meals to getting dressed and using the lavatory. As many as 7 in 10 older adults would require some level of help, in keeping with the U.S. Department of Health and Human Services.
“In the event you live a protracted life, the probabilities of needing long-term care are increasingly high,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance. That help can range from unpaid, part-time caregiving from members of the family to shelling out 1000’s of dollars a month for a nursing home.
Understanding the likelihood of eventually needing long-term care is a critical a part of planning for growing older, experts say. Yet lower than half of adults say they’ve had a serious conversation with a loved one about who will care for them in the event that they need assistance with day by day activities or how they might pay for care, in keeping with a survey from KFF, a nonprofit health policy organization.
How many individuals really need long-term care?
Despite loads of media coverage about an impending long-term care crisis, most adults still underestimate their individual risk for needing extensive care after they become older.
While many older adults will have the option to get by with help a number of times every week, over half (52%) of adults age 65 and up could have “high-intensity” needs for a minimum of a number of months, in keeping with a recent report from the Center for Retirement Research at Boston College. Individuals with high-intensity needs require help with two or more day by day activities or have a dementia diagnosis.
The chance for this more intensive care varies by education, race and gender. Some 56% of girls will need more intensive, longer-term care, compared with 46% of men, researchers found.
Black and Hispanic adults are also more likely than white adults to wish high-intensity care, with 57% of every group needing it compared with 50% of white older adults. Across all races, those with college degrees are less prone to need it than those with a highschool diploma.
How do people pay for long-term care?
Forty-five percent of adults said they thought Medicare would pay for a nursing home in the event that they needed it, in keeping with KFF. That, experts say, is one in all the most important misunderstandings around this issue: Medicare doesn’t pay for long-term care.
Most long-term caregiving, nearly two-thirds, is definitely handled via unpaid help from members of the family, a 2021 study from the Center for Retirement Research found. Some 33% of caregiving hours provided to individuals 65 and older come from children, with one other 17% from spouses.
In the event you do find yourself needing skilled care, though, the value tag may be steep. In 2024, the median annual cost for an in-home health aide topped $77,000, while a non-public room in a nursing home cost greater than $127,000, in keeping with Genworth Financial, which sells long-term care insurance.
Medicaid is essentially the most common source for paying these costs. Yet only lower-income retirees with no assets — or those that’ve spent down all their assets — can qualify. After Medicaid, the Center for Retirement Research reports that about 8% of long-term care was paid for out of pocket and 4% was covered through insurance. Those figures track with industry statistics; LIMRA estimates between 3% and 4% of individuals older than 50 have a long-term care insurance policy, and greater than 1 / 4 of adults and not using a standalone long-term care insurance policy cite cost as the rationale why.
Long-term care insurance prices are based on age, gender and your current and up to date (over the past several years) health. As with all insurance products, premiums vary based on the coverage level you choose. For a $165,000 profit level and a 2% inflation protection, the standard annual premium for a 60-year-old is about $2,000 for a single male and $3,300 for a single female, in keeping with the long-term care insurance association. (Prices for ladies are consistently higher because they’re more prone to need long-term care.)
“Sometimes needing long-term care can get conflated with needing long-term care insurance,” Dick Weber, who offers fee-only insurance advising, previously told Money. Needing that care is a reality for a lot of, but buying long-term care insurance remains to be a comparatively unusual decision.
In the event you are desirous about buying insurance coverage, Webber recommends you begin researching your options in your 50s. Premiums are likely to jump after age 65, and denial rates spike as you become older, too.
More from Money:
You Might Be Overestimating How Much Money You Must Save for Retirement
Here’s Who Actually Needs Long-Term Care Insurance — and When to Buy It
How Much Money Do You Must Retire? Answer These 4 Inquiries to Find Out