The most dangerous issue in retirement is one that is often overlooked or not given serious consideration: How will retirees pay for long-term care without destroying a lifetime of accumulated assets?
Over 70 million people will be over the age of 65 by 2030. That is nearly one of every five Americans. Long-term care will be a serious expense for everyone over age 65; it will be the most dangerous financial issue facing all Americans.
The U.S. Department of Health and Human Services forecasts that 70 percent of people who reach age 65 will require some type of long-term care and that care will last for an average of three years. At an average cost of $8,000 per month, or at least $100,000 per year, that works out to $300,000 needed to pay for long-term care.
If you apply only 3 percent inflation to those numbers, then the problem becomes enormous. We would need $16,000 per month, at least $200,000 per year, or an average of $600,000 per recipient by 2038.
Home care is equally expensive. Current costs range between $100,000 and $150,000 per year. Most people with Alzheimer’s are cared for at home. One third of Alzheimer’s cases last as long as five years. Family members are estimated to provide several billion dollars of non-paid care every year.
But those are merely the financial costs. For people who cannot afford help, the physical and emotional toll can be devastating. I have seen many cases where the caregiver gets so worn down that they pass away before the recipient of the care.