Long-Term Care in Retirement
Nearly 70 percent of older Americans will require long-term care at some point., according to the Department of Health and Human Services.
When it comes to aging, experts say the greatest challenge we face – more than pensions or birth rates – is planning for and financing long-term care. Part of the reason for this is the growing elderly sector of our society because of increased life expectancy.
As our ability to treat and rid the society of diseases gets better and better and as we are able to provide superior care for our fellow man, it’s only logical that we’ll be able to extend life expectancy. Think about it – it wasn’t that long ago when the common cold could be a death sentence.
On average, 60-year-old Americans can expect to live another 20 or 25 years, depending on their gender and other variables. And most Baby Boomers can also count on a couple of extra years free of disease and disability compared to 60-year-olds of just 15 years ago due to improved medical treatments.
Case in point: According to the Minnesota State Demographic Center, next year the state’s population age 65 and over is expected to eclipse those of K-12 age (5-17) — for the first time ever.
But as a result of this, we could be faced with a bubble of older folks who need to be cared for. And with recent moves to overhaul the American healthcare system and major cuts to Medicaid, this could spell bad news for the elderly.
Medicare and Medicaid became the first public health insurance programs in the U.S. in 1965. Medicare was intended for individuals over 65 years old and those with end-stage renal disease, or kidney failure. Medicaid was intended to cover low-income individuals. But as of the fiscal year 2014, long-term care services accounted for about a third of Medicaid spending, or $152 billion. [5]
One common way of paying for long-term care is by dipping into a retirement fund. Long-term care can be expensive. And the longer you survive it, the more it costs you or your family.
There is a possible solution though: Life insurance that offers a long-term care benefit – “hybrid insurance.” It is life insurance with a long-term care rider that allows you to use that money for healthcare if you need it.
Considering that long-term care insurance policies are some of the more complicated ones that you may encounter, this hybrid product may be just the ticket to simplify the process.
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