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Should your retirement plan include long-term care insurance?

Long-term care insurance could be an effective toll as you plan your retirement.  Getty Images

There are quite a few expenses you should think about as you plan your retirement. Costs like housing, utilities, food and entertainment all need to be accounted for. Although these are important, they're probably not the only expenses to think about. 

Another expense to consider is the cost of long-term care. There's a high probability that you'll need some form of long-term care in your golden years and and it can be costly. If you don't plan for it, and your estate isn't large enough to cover the cost, you could be forced to make tough financial and healthcare decisions. 

Long-term care insurance is designed to protect you from having to cut corners on your care. If you're unable to afford care on your own, this type of insurance can bridge the gap between what you can afford and the care you deserve. Even if you can afford your care out of pocket, long-term care insurance can help protect your estate. But should a long-term care policy be part of your retirement plan?

Purchase long-term care insurance now to make sure you can afford the care you deserve

Should your retirement plan include long-term care insurance?

"You should absolutely include long-term care insurance in your retirement plan," says Wilson Coffman, president of Coffman Retirement Group in Huntsville, Alabama. Here's why long-term care insurance is likely a wise addition to your retirement plan:

There's a high likelihood you'll need long-term care

Coffman says that seven out of 10 people who are 65 years old and older "will need some form of long-term care." He went on to explain that your odds of reaching an age that likely requires long-term care are growing. 

"There are more than 15,000 people per day turning age 65 and the number will grow to 35,000 people per day in the year 2035," says Coffman. "Today, healthy lifestyles and advances in medical care means each retiree is living longer than before. It also means more years of health-related expenses, so that is why it is important" to use long-term care insurance as a retirement tool. Ultimately, this coverage helps protect "yourself, your loved ones and your legacy."

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The cost of long-term care can be high

"You must prepare for life's unpredictable events with" long-term care insurance, says Coffman. That's because, "facility costs could be upwards of tens of thousands per year."

So, how much does long-term care cost? That depends on the type of care you take advantage of. Here are a few averages to consider according to Genworth:

At-home care

  • Homemaker services: Estimates suggest that homemaker services will cost roughly $6,468 per month by 2030. 
  • Home health aide: Genworth expects the cost of a home health aide to be about $6,717 per month by 2030. 

Assisted living communities

Genworth says that those living in an assisted living community will pay an average of $5,871 per month by the year 2030. 

Nursing homes

  • Semi-private room: Genworth predicts that you'll pay $10,318 per month for a semi-private room in a nursing home by 2030. 
  • Private room: A private room in a nursing home is expected to cost about $11,787 by the year 2030.   

Your estate's ability to cover the cost of long-term care may be limited

Long-term care services can cost more than $100,000 per year. Even if you have a sizable estate, the cost of long-term care can become a burden. If you're not prepared for this potential expense, it could have a detrimental impact on the assets you planned to leave behind for your loved ones.

Find out how affordable long-term care insurance can be

The bottom line

Long-term care insurance is a smart way to pay for the high and growing cost of healthcare in your golden years. As such, this type of insurance has a place in most retirement plans. Consider the factors above as you decide if long-term care insurance should be a part of your retirement plan. 

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