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Four Actions to Help Prepare for Healthcare Expenses in Retirement - 2
By Saghir A. Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the ummah will benefit from this effort through greater financial empowerment, enabling the community to live securely and fulfill their religious and moral obligations towards charitable activities.)
Factor in long-term care
Long-term care involves services people may need if they’re chronically ill or have disabilities rendering them unable to perform daily activities such as bathing or dressing. The need to prepare for those services may be more important than you think: According to LongTermCare.gov, someone turning age 65 today has almost a 70% chance of needing long-term care services at some point.2
In the case of Medicare, coverage kicks in only if long-term care is medically necessary — and then only for 100 days in a skilled or specialized nursing facility following a three-day inpatient hospital stay. The alternative — staying in a semiprivate nursing home — can prove costly. The monthly median cost of a semiprivate nursing home room is $8,929 per month, or $294 per day.3
Research options to fill the gap
Whether you qualify for coverage under Medicare or not, you’ll likely need an additional resource to help balance benefits and costs. Those who have Medicare may want to consider a supplemental health insurance policy such as Medigap. Such a policy helps you pay for some of the medical costs Medicare doesn’t cover.
Purchasing a long-term-care insurance policy may help you avoid, or at least reduce, the amount you might need to pull from your savings or that a family member might need to contribute to cover long-term-care costs. The average stay in a long-term-care facility is three years, which can add up if you don’t opt for long-term-care insurance. If you stay in a semiprivate room in a nursing home for three years, you may expect to pay roughly $321,000 or more, depending on your required level of care.
The two main forms of long-term-care insurance are traditional and hybrid. The traditional variety typically involves paying an annual premium and lets you choose how much coverage you want. The coverage is only valid if you are paying premiums.
The hybrid variety is actually a life insurance policy that allows a portion of the policy’s cash value to be used for long-term care. Beneficiaries can also receive a death benefit when you pass away.
Death benefits will typically be reduced if long-term care benefits are used.
Retirement planning really boils down to understanding and mitigating the biggest risks. Then you can decide how to address the risks so that you feel comfortable about your future.
1. “1 in 5 US Seniors Now Skip Meds Because of Cost” U.S. News & World Report, May 22, 2023
2. “How Much Care Will You Need?” LongTermCare.gov
3. “Nursing Home Costs in 2024,” SeniorLiving.org
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, or does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
