Nursing homes are extremely expensive. On average, they cost $83,000 per year. But that's not including the costs of those "extras" like therapy and dementia care. And with more people than ever living into their 90s, the need for long-term care is rising and will only continue to rise as we get older.
As you prepare your retirement plans, it's important to think about how you will pay for long-term care if needed. Home equity is an attractive option because it's often available in larger amounts than other sources of funds, but this may not always be the best choice when considering your future needs. Read on if you want to learn more about preserving your home equity for the future instead of selling at retirement to pay for care or if you're just curious about what aging in America looks like from a financial perspective.END>
Long-term care is a broad term that refers to any type of care that individuals need on an extended basis. Typically, this includes help with things like dressing, bathing, eating, and going to the bathroom. Long-term care is different from a nursing home in that it takes place in the individual's home or in some other setting of their choosing.
On average, a stay at a nursing home costs $83,000 per year. That doesn't include the cost of "extras" like dementia care or therapy. And with more people living into their 90s, the need for long-term care is rising.
So why does it cost so much?
One reason is that nursing home beds are in high demand and short supply. There are many patients who need them but not enough to go around. This means that facilities have to charge more because they can't be selective about what they admit, which leads to higher costs for everyone.
Nursing homes also have expensive medical equipment, like MRI machines or endoscopes that they need to maintain or replace regularly. They also have higher staffing levels than other types of assisted living and must factor in costly liability insurance as well as the fact there's no turnover among nursing staff members because of their specialized training and skillset (as compared to say an assisted living where aides come and go).
Another big expense: Medicare pays only about $2,000 per month for skilled nursing services - less than half the average cost of a bed in most facilities. To cover these expenses, nursing homes often require residents' families to pay private "supplemental" insurance premiums on top of monthly Medicare rates - which can amount to another $6,000-$8,000 per year depending on which plan is purchased. If you don't want your family members paying these supplemental payments on your
Nursing homes are expensive, and you may be tempted to sell your home in order to pay for care. But that might not be the best choice when you consider your future needs.
Home equity is an attractive option because it's often available in larger amounts than other sources of funds, but this might not always be the best choice when considering your future needs. Read on if you want to learn more about preserving your home equity for the future instead of selling at retirement to pay for care or if you're just curious about what aging in America looks like from a financial perspective.
If you're wondering what aging in America looks like from a financial perspective, the truth is that it's not pretty. In 2012, half of all households age 55 or older had no retirement savings. That's up from 40% in 2007.
So, how can you prepare for this? One solution is to maintain your home equity and avoid selling at retirement just to pay for care. Home equity provides a more stable form of funding than other sources because it can be accessed without penalty during retirement.
Here are some things to consider when thinking about maintaining your home equity:
The cost of care has been steadily increasing and will continue to do so. There are ways to plan for this by saving for the future, managing your assets and taking advantage of government assistance.
1. What is long-term care?
Long-term care is the medical and personal assistance needed with one's activities of daily living, like bathing, eating and using the bathroom.
2. Why does long-term care cost so much?
It costs so much because it is a combination of expensive treatments, professional care that is often needed round-the-clock, and the fact that most people will need to use it for a long time.
3. How to avoid selling your house at retirement to pay for care
There are three ways to avoid this: maintaining your home equity, paying for care out of pocket or using government assistance programs.
4. Maintaining home equity
Maintaining your home equity is important as it will help you pay for extra expenses like long-term care or assisted living that may arise in retirement. This can be done by taking advantage of tax deductions and credits and making sure you are getting the most out of your money.
