Pre-retirees: Plan now for health care and long-term care costs
If you’re close to retirement, you’ll have several financial issues to consider. But you’ll want to pay attention to one of the most important of these issues: health care and long-term care costs. How can you prepare yourself for these expenses?
The best way to begin is to get an early start on estimating these care costs. According to the Edward Jones/Age Wave Four Pillars of the New Retirement study, retirees’ greatest financial worry, however, is not economic uncertainties like recessions, inflation or taxes—even during the extreme uncertainty caused by the COVID-19 pandemic. Their greatest financial worries are encountering unexpected expenses and the cost of health care, including long-term care. Among those age 75 and older, healthcare and long-term care costs (47%) outrank unexpected expenses (43%) as the biggest financial worry. And women retirees are noticeably more worried than men about healthcare costs (54% vs. 40%).
The annual out-of-pocket costs for traditional medical expenses may not be insignificant, but it’s certainly a number that can be addressed by careful planning. The national averages for public long-term care homes range between basic rooms and private rooms is $22,696 to $34,236 per year ($22,696 and $32,419 per year based on Ontario Ministry of Health & Long-term Care 2019.) The preference for most people is to be able to continue to live in their own home as long as possible, the cost for private home care can be significantly higher than the cost of moving into a long-term care facility
Clearly, between regular medical costs covered by your provincial medical plan or those not covered by it, and costs resulting from the possible need for long-term care, your health care and long-term care bills can mount. To meet these costs, you need to plan ahead – and take action.
For example, it’s essential that you incorporate health care expenses into your overall financial strategy. You can also work with your Edward Jones financial advisor to run some “what-if” analyses to see if your strategy would be derailed by a potential long-term care stay. And your financial advisor you work with may be able to suggest specific protection vehicles that can help you meet the costs of long-term care.
The best time to prepare for your health care and long-term care costs during retirement is well before you retire. So, if you haven’t already started, now is the time to do so. When it comes to paying for health care, the fewer surprises, the better.
