Our team works with clients every day who are retired, approaching retirement, or simply planning to retire someday. According to the 2022 illumifin Cost of Care Study(1), more than 12 million Americans are currently paying for long-term care services. This may be in the form of nursing home fees, home-based care or other support—but regardless of the type of care, the costs can be significant. And once you start paying for them, they often don’t go away. That’s why planning for the cost of long-term care is a crucial part of retirement planning.
What is long-term care?
Long-term care is a category of services designed to help people meet their health and personal care needs. People typically need long-term care when they are unable to perform activities of daily living on their own. The need for long-term care often follows an unplanned health setback, such as a heart attack or stroke. In other instances, the need develops gradually.
Long-term care services can range from minor, short-term assistance to live-in solutions like full-time, in-home care or a nursing home. To meet the criteria for long-term care, a person must need help with at least two everyday activities like eating, bathing, getting out of bed, dressing, and using the restroom.
Unfortunately, the costs for these services are often significant — and once you start using them, they could become an ongoing expense. According to Northwestern Mutual’s 2022 Cost of Care Study(2), the cost of long-term care can vary widely depending on the type of care needed and where it is provided. The 2022 national average for assisted living is over $60,000 per year, and a nursing home averages upwards of $100,000 a year. Given the significant costs associated with long-term care, it’s important to plan ahead for how you may cover this expense should you ever be in a situation where you need it. Planning can help give you more freedom to choose the right option without derailing your financial plan should you have a need for long-term care.
Planning ahead and having a strategy for how to cover these potential expenses will put you in the best position to prepare for long-term care needs. If you need help developing a plan that fits your financial situation, consider working with the team at Capital River Wealth Management to make sure you’re covered.
Citation: This article was adapted from Northwestern Mutual’s Life & Money Article by Laura Bengs.
(1) 2022 illumifin Cost of Care Study. Published March 2023 by illumifin Corporation.
(2) Published March 2022 by Long Term Care Group, Inc. for Northwestern Mutual.
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Disclosures: Dan Schiffman uses Capital River Wealth Management as a marketing name for doing business as representatives of Northwestern Mutual. Capital River Wealth Management is not a registered investment adviser, broker-dealer, insurance agency or federal savings bank. Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries. Dan Schiffman, Annette Tinder, Luke McLaughlin, and Matt Evich are Insurance Agents of NM and Northwestern Long Term Care Insurance Company, Milwaukee, WI, (long-term care insurance), a subsidiary of NM. Investment advisory services provided as an Advisor of Northwestern Mutual Wealth Management Company®, (NMWMC) Milwaukee, WI, a subsidiary of NM and a federal savings bank. Investment brokerage services provided as a Registered Representative of Northwestern Mutual Investment Services, LLC (NMIS), a subsidiary of NM, broker-dealer, registered investment adviser and member FINRA and SIPC. The products and services referenced are offered and sold only by appropriately appointed and licensed entities and financial advisors and representatives. Financial advisors and representatives and their staff might not represent all entities shown or provide all the products or services discussed. Not all products and services are available in all states. Not all Northwestern Mutual representatives are advisors. Only those representatives with “Advisor” in their title or who otherwise disclose their status as an advisor of NMWMC the titles "Financial Advisor" or "Wealth Management Advisor" are credentialed as NMWMC representatives to provide investment advisory services.