It is estimated that between now and the year 2030, roughly 10,000 people in the United States will turn 65 each and every day – and approximately 7 in 10 of these individuals will need at least some type of long-term care in their lifetime.

Although you might not want to think about it, the reality is that without a way to pay for this type of care, all of your savings and other assets could be depleted in a very short period of time.

Then what?

How Long Would It Take to Deplete Your Assets?

According to a recent study by Fidelity Investments, healthcare continues to be one of the largest expenses in retirement. An average retired couple age 65 in 2022 may need approximately $315,000 saved (after tax) to cover their medical and other healthcare-related expenses for the remainder of their lifetime. But this figure does not include the added cost of a long-term care need.

While the cost of long-term care can vary, based on the type of care that is required and the recipient’s demographic location, on average, in 2021, the median monthly cost of a private room in a skilled nursing home facility was over $9,000. A semi-private room was less – but not much – weighing in at nearly $8,000 per month.

Monthly Median Cost of Care in the U.S. (in 2021)

Product NamePerspective II Variable Annuity
IssuerJackson National Life
Type of ProductVariable Annuity
Standard & Poor's Rating"AA" (Very Strong)
Phone Number877-565-2968

Source: Genworth 2021 Cost of Care Survey

Based on the figures in the chart above, how long would it take for your assets to be depleted – especially if you or your spouse still had to pay your other living expenses, such as housing, transportation, and food, too?

Solutions for Paying Long-Term Care Costs

Many people are unhappily surprised to learn that Medicare pays very little – if anything – for long-term care… and those who do qualify for coverage will still typically be required to pay a hefty co-insurance amount out-of-pocket.

Another potential option is to purchase stand-alone long-term care insurance. But unfortunately, these plans can be pricy – and if you never need the coverage, you could end up spending tens of thousands of dollars on an unnecessary policy.

One alternative that has gained popularity over the past decade or so is an annuity with a long-term care rider attached. A long-term care rider is an optional benefit that can be added to the annuity. In some cases, this benefit may even be accessible right away. But, if it is never used, you may be allowed to pass it on to your beneficiary(ies).

Annuities are designed for paying out a regular stream of income. By including a long-term care rider, there is a separate fund that is earmarked specifically for long-term care expenses (along with the cash fund that may be used in any way you choose).

The income from the long-term care component is oftentimes a multiple of the regular monthly income stream from the annuity. Depending on the particular annuity, the long-term care benefit may even be two or three times more than the annuity’s regular monthly payout.

Having a plan like this in place can provide you with a way to pay for some or all of your potential long-term care services, while at the same time being able to generate a regular stream of income from the annuity – even if you never need care.

Because there are many different types of annuities available in the marketplace today, it is recommended that you first discuss your specific needs and objectives with an annuity specialist who can help you narrow down which may be best for you.

Do You Have a Way to Protect Your Portfolio from a Costly Long-Term Care Need?

If you don’t yet have a plan in place for covering potential long-term care costs, you could be putting your assets – and your financial security – at risk. At Annuity Gator, we assist consumers with understanding how annuities work, and with determining whether or not one may be a good option for them.

So, if you have any questions or would like more detailed information, feel free to contact Annuity Gator and chat with an expert. We can be reached at (888) 440-2468, or via email by going to our secure online contact form. We look forward to hearing from you.

How to solve for long-term care expenses with an annuity