Whether it’s a short stay at an assisted living facility, around-the-clock care from an in-home nurse or even help from younger family members, roughly half of all Americans 65 and older will require long-term care. Improved medical technology is saving and prolonging lives, but accidents and degenerative diseases can diminish the independence of even the most seemingly-healthy seniors.

Unfortunately, Medicare bears little to no responsibility for the costs of long-term care, and the recent Affordable Care Act has reduced government coverage even further. No matter when they plan to retire, Americans in their 60s, 50s and even 40s need to start planning and saving for these additional expenses.

Of course, it can be tough to determine just how much money will be necessary for long-term care. People who’ve already seen signs of dementia, arthritis or other chronic conditions can count on high costs, but strokes and falls can easily throw a wrench in the works. Still-healthy seniors also need to weigh the costs and benefits of long-term care insurance – an additional expense that may not pay off. Here are a few considerations for recent and soon-to-be retirees.

Current Conditions and Future Ailments
The first thing seniors should consider is their current state of health. Purely physical problems such as arthritis or osteoporosis may require home renovations, assistive devices and other one-off expenses, but mental degeneration will likely lead to longer-term costs.

“You should look at the early signs of dementia as a bell that goes off and says, ‘we need to plan for long-term care immediately,’” said Ronald Fatoullah, a New York-based elder law and estate planning attorney. In fact, since it’s usually too late to qualify for insurance at that point, even healthy people with family histories of Alzheimer’s may want to start saving early for assisted living.

Work and retirement can also massively impact the necessity and costs of long-term care. “Statistics show that if you retire, the chances of your health declining and you becoming severely depressed just rise tremendously,” Fatoullah added. While illnesses themselves can certainly lead to early retirement, the general trend is that healthier people work longer. Quite a few Baby Boomers are staying in the workforce as they age, a decision that can ultimately lead to higher income and lower long-term care costs.

In-Home Care or Assisted Living? 
What’s the ideal choice for people who do need custodial or nursing care? “Most people want to stay at home as long as possible,” said Dian Haider, New Business Manager and Long-Term Care Specialist at Ryan Insurance Strategy Consultants. People enjoy the familiarity and comfort of their own houses, and in-home services will usually cost less than assisted living if they only need help with a few tasks.

However, in-home care isn’t always cheaper or even preferable. “Someone with memory loss may no longer be safe, even if in-home services are delivered daily,” said Cathy Ritter, Vice President of Marketing and Communications at Asbury Communities. “In many cases, the choice between in-home services and an assisted living community can come down to a decision about quality of life rather than dollars.” Since 24-hour in-home care often costs more than a stay at a nursing facility, moving out is sometimes the cheaper and more beneficial option.

As for the actual costs, figures vary wildly between cities and states. Haider recommends an estimation tool created by the Department of Health and Human Services at LongTermCare.gov, which tracks and projects average nationwide costs for home care, adult daycare, assisted living facilities and nursing homes. Based on their predicted long-term care needs and lifespans, retirees can estimate inflation-adjusted costs for up to 30 years.

Ultimately, no matter where retirees live or what options they choose, they need to be aware of the costs well ahead of time. “The biggest mistake is that everyone underestimates costs, and most people underestimate by at least three times,” said Fatoullah.

Help from the Family
Long-term care services may seem prohibitively pricey, but future-thinking retirees often forget the help they’ll receive from their adult children. “I don’t think most people realize how much care is provided by family members,” noted Haider. From odd tasks to full-time nursing care, family assistance can knock tens or even hundreds of thousands of dollars off seniors’ yearly costs.

Still, this assistance brings costs of its own. Adult children often have to reduce their own workloads or quit their jobs, and they may need to dip into their parents’ savings while they provide care. Adult diapers, syringes and other consumables will also require constant funds, no matter who’s coming over to help.

More importantly, family members may just not be able to perform the required tasks. “Many times it’s very hard for a son or daughter to do the job because it’s so emotional,” said Fatoullah. “I think it’s very dangerous to rely on it.” Ritter agreed, noting that “certain medical conditions may make it extremely difficult for a child to provide the needed care.” Emotional issues aside, the logistics of certain conditions will demand professional help.

Long-Term Coverage Through Insurance and Medicaid
Recent reforms may be increasing seniors’ access to hospital services and medications, but they’re not making  it any easier to pay for in-home help or assisted living. “Often, people mistakenly think that Medicare will pay for long-term care, when in fact, national healthcare reform is actually reducing Medicare coverage for short-term rehabilitation therapy,” said Ritter.

Fortunately, long-term care insurance can still offset quite a few costs, especially for people who buy in early. The average annual premium runs between $2,000 and $3,000, though exact figures vary according to age, health conditions and amount of coverage. Haider added that “The nice thing about having long-term care insurance is that whether you have a Cadillac policy or a VW Bug policy, basic features remain the same.” These features include:

  • Guarantees against cancellation
  • Premiums that won’t increase because of age or deteriorating health
  • Care coordinators
  • Inflation protection

For those who can’t afford private insurance, however, Medicaid can still augment savings. Seniors who meet their states’ minimum monthly income requirements can often qualify for nursing home or assisted living coverage, though they’ll still need to contribute some funds out-of-pocket.

Getting a Head Start
Above all, people planning for retirement need to begin considering their long-term care costs as soon as possible. “Start earlier than everybody else is telling you,” Fatoullah cautioned. “Starting around age 50, you want to have long-term care insurance, an emergency fund and a financial planner.”

While Fatoullah used to start helping his clients with long-term care concerns around age 65, increases in lifespans, medical expenses and living costs have changed his recommendations. People are living longer lives with greater quality-of-life expectations than generations past, yet few soon-to-be retirees have accumulated enough assets to rely solely on savings.