Serious content alert! I try to stay away from politics in this blog. I completely agree that medical costs are absurd in this country, but what I also know is that there is a lot of blame to go around for that. We do need reforms, although they need to be rationale reforms and that means all sorts of groups being willing to admit the responsibility that they share and being willing to look for sensible answers. That, however, is not the actual subject of this post. The subject is how much money you need for your “old age”.
I do not go into that specifically in my book, Your Room at the End: Thoughts About Aging We’d Rather Avoid, but I do touch on it. None of us – none, want to believe that we will need to go into an assisted living facility (ALF). And in some case, it isn’t necessary. There’s no question that staying in your own home is generally better emotionally than being in an ALF. However, planning to stay in your own home comes with a number of drawbacks and if you reach a stage where it is physically unsafe, your options shrink considerably. So, finding out the cost of an ALF well before you need one and deciding which one you would be willing to go into is an important first step. Then you calculate a specified number of years that you might be in the ALF and that becomes the planning factor for your “old age”. The number is likely to be startling since most ALFs are a minimum of $2,000/month and easily range from $3-5,000 depending on location and services. If you own your own home, planning to sell that to fund moving into an ALF is fine, but there needs to be a “transition” time since the house may not sell right away. The other unfortunate reality is that the proceeds from the house might not bring as much as anticipated.
This brings me to the subject of long term care insurance. Medicare and normal health insurance does not – that means does not – cover long term care costs. The issue with long term care insurance is that you have to very carefully look at what you pay and what you get in return. The earlier you take out the insurance, the lower the premiums are, but what if you pay all those premiums and never need the care? If you wait until you’re older, the premiums jump significantly. It is unquestionably a gamble and as tedious as it is to “read the fine print”, you really need to do so before making a decision about this kind of insurance. However, it can be worth every penny spent depending on your situation.
A reverse mortgage is another option that only works in certain circumstances. That, though, I’ll save for another post.
