Longer life expectancy in the U.S. has led to a whole host of financial problems – namely the risk of depleting assets if they are required for a healthcare and/or long-term care need.
Even if you are currently the picture of good health – and you have a nice size nest egg in place – the reality is that you could still end up being one of the 7 in 10 who will require at least some type of care during your remaining lifetime. And at a cost of six-figures per year in some areas, you may not be “too wealthy” to need some type of long-term care protection.
The Real Cost of a Long-Term Care Need
Nobody relishes the idea of thinking about being unable to perform basic living activities. But as we get older, this is often a natural part of life. Unfortunately, the price of assistance – either at home or in a facility – is high.
Monthly Median Cost of Care in the U.S. (in 2021)
| In-home care: Homemaker Services Home health aide | Cost: $4,957 $5,148 |
| Community and assisted living: Adult day health care Assisted living facility | Cost: $1,690 $4,500 |
| Nursing home facility: Semi-private room Private room | Cost: $7,908 $9,034 |
Source: Genworth 2021 Cost of Care Survey
Based on these figures, it wouldn’t take long for even a substantial portfolio to be depleted – particularly if you or your spouse still had to pay your other living expenses, like housing, transportation, and food, as well. One option for relief is to purchase a stand-alone long-term care insurance policy. But the premium on these plans can be high – so high, in fact, that many people who have sizeable savings opt to take the risk that they won’t need care, or that they can pay for it all out-of-pocket. But that could be a big mistake.
How to Cushion the Cost of Care Without Buying a Long-Term Care Insurance Policy
The good news is that there are ways to pay for long-term care without having to buy a pricy insurance policy or deplete your assets. One option is to use an annuity – either with or without a long-term care rider. Annuities are built for paying out a set amount of income on a regular basis. This incoming cash flow may continue for a pre-determined period of time, such as 10 or 20 years, or even for the remainder of your lifetime. Knowing that you have that cash arriving on a regular basis, you could earmark some or all of it to pay for various long-term care services that you require – regardless of whether you receive these services at home or in a care facility. Depending on the particular annuity, you may be able to add a long-term care rider to the plan. In this instance, a separate “pool” of dollars can be earmarked in the annuity for long-term care needs. In addition, some annuities with long-term care riders may even pay out double or triple the amount of the regular income payment if the funds are going towards paying for your care. (The same can be true if you are diagnosed with a terminal, chronic, and/or critical illness).
Is an Annuity Right for You?
Annuities are flexible financial vehicles that can provide you with peace of mind in knowing that income will arrive on a regular basis. But, because there are many different types of annuities to choose from, it is essential that you first understand what type of plan you are purchasing. Otherwise, it can be difficult – and expensive – to get out of it. At Annuity Gator, our primary focus is on educating consumers (as well as financial advisors) on how annuities work, and how to narrow down what type of annuity – if any – is a viable solution. So, if you would like more details on where an annuity could possibly benefit you, feel free to contact the experts at Annuity Gator by calling (888) 440-2468 or chat with us via email by clicking here. We look forward to assisting you.
