Back in February 2013 a powerful nor’easter blew through our part of the country and turned Connecticut into a federal disaster area. Hamden even had the honor of recording the highest snowfall of the storm, a whopping 40 inches. Those of you that remember it know very well that it wasn’t just record snowfall, but hurricane force winds as well that we were dealing with. It was a vicious storm, causing 18 fatalities throughout the country.
If a storm warning were issued today, and they said there was a 70% chance of a nor’easter of similar magnitude, what would you do? Would you sit back, relax, and tell yourself, “There’s a 30% chance nothing will happen. I’m fine.”? Or would you prepare for the likelihood of a blizzard? I would be stocking my pantry, canceling my travel plans, and gathering all of the candles in the house in case of a power outage. If nothing happens, no harm done. But if something happens, at least I’m prepared for it.
There is another area of life with the same probabilities, but most people respond differently. According to the US Department of Health and Human Services, someone turning 65 today has almost a 70% chance of needing some type of long-term care services in their remaining years. However, with over 41 million Americans over age 65 in 2012, only 8.1 million people of any age had long-term care insurance. When it comes to blizzards, some people have to live through one in order to take the warnings seriously. Unfortunately, usually with long-term care you only get one chance.
Does everyone really need long-term care insurance, though? Can’t someone with a few hundred thousand saved pay out of pocket and be just fine? Long-term care can be much more expensive than many people realize. A comprehensive survey recently came out that breaks down the cost of care by state, listing the different types of care, the price range, the median rates and the five-year annual growth. The Genworth 2015 Cost of Care survey sheds some light on what long-term care really costs in Connecticut so that people can make better-informed decision about insuring themselves.
Long-Term Care Costs in Connecticut
The most basic component of long-term care is homemaker services. This is needed when you are no longer able to perform day-to-day household duties like housekeeping, laundry, grocery shopping and meal preparation. Here in Connecticut, this costs $16-$25 an hour, averaging $45,760 a year. A higher level of in-home care is home health aide services, which average $50,336 a year in our state. Sixty-five percent of people need home care for an average of two years. For many people who saved and invested well during their working years a cost of about $100,000 for two years of home care may sound affordable. However, 37% of people must leave their home and be cared for in a facility.
Once you leave home, the cost of long-term care dramatically increases. A one-bedroom single occupancy in an assisted living facility averages $66,900 a year in Connecticut. However, there is a very broad range of facilities, and assisted living costs may be double that figure. Nursing homes are much more expensive than assisted living facilities because of the level of care provided. A semi-private room in a nursing home averages $146,000 a year and a private room is $158,775.
Statistics show that 20% of 65-year-olds will need over five years of long-term care support. Now, if all you need are homemaker services that will cost you about $228,800. But, if you need to be in a nursing home and you’d like a private room, you’re looking at a bill of almost $800,000.
Should I Buy Long-Term Care Insurance?
When deciding if you need long-term care insurance, you need to know how much wealth you have and how much you would be willing to spend on care. Then, consider the statistics and address your family health history. For example, if you have family members who have suffered from Alzheimer’s or dementia, you may be at a higher risk which would most likely involve spending several years in an assisted living facility or nursing home.
As with any insurance, long-term care insurance protects you against an unsure future. None of us knows what the future holds; once we know for certain it will be too late. It is important to have a long-term care strategy and a plan in place before you need it. Understanding the different long-term care options available and how they best fit into your retirement planning can feel overwhelming, so it is helpful to work with an experienced financial professional.
At Nobile Hinchey Private Wealth Management we can help you understand your options and find the most appropriate long-term care solution for you. Give us a call today at at (860) 659-5977 or email me at [email protected] to schedule an appointment to sit down and discuss your unique needs and how you can have a financially secure retirement, no matter your long-term care needs.
About Michael Nobile
Michael Nobile is the CEO of Nobile Hinchey Private Wealth Management, an independent financial services firm serving high-net-worth families and business owners near Glastonbury, Connecticut. Michael brings 35 plus years of experience in the wealth management industry and is extremely knowledgeable in retirement income and tax advantaged strategies. Outside the office, Michael enjoys time with his wife, two children, and two grandchildren. Longtime Glastonbury residents, they now reside in East Hampton. It’s Michael’s dream to introduce his grandchildren to his business and work together someday.