Consider Long-Term Care Insurance to Protect Your Nest Egg

Is long-term care insurance right for you?

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In addition to the physical and emotional impact of a serious illness, the need for skilled nursing care can wreak havoc on your savings and investments. In 2008, the average annual rate in the U.S. for a private nursing home room was $76,460, or about $209 a day. Assisted Living (less than full care) averaged $36,096 a year.* As you can imagine, these costs can quickly add up and deplete the portfolio you worked so long and hard to accumulate.

A good rule of thumb is if your investment assets are $200,000 or less or over $1,500,000, you should consider self-insuring or going without long-term care insurance. For the larger portfolio, a 3-year nursing home stay costing about $230,000 may be able to be absorbed. In fact, other expenses could possibly decline if one spouse is ill or not living at home. The smaller portfolio will be eligible for government assistance (Medicaid) before too long and the cost of long-term care insurance might also be prohibitive.

If you are not a big fan of insurance, consider a policy which covers part of the expenses – say $100/day vs. the average cost of $209/day. This will help to keep your costs down over a full-coverage insurance policy.

Today’s retirees and baby boomers certainly have many important issues to consider. Hopefully you will find yourself in a position to take advantage of one or more of these strategies. And don’t forget – start thinking about what you’ll do in retirement before you get there!

* Genworth Financial 2008 Cost of Care Survey (April 2008)

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