Long-term care insurance is an important way to mitigate risk in retirement. Unexpected health issues and the related costs can take over a retiree’s financial life if they don’t have a plan to pay for costs of care. The cost of such a policy will depend on a handful of factors – including your age and coverage level – so whether you should accept a $2,000 annual premium depends entirely on your personal profile.
If you are buying early, this price might be a little high. In your 50's, a policy can cost between $1,000 and $2,000 per year depending on what you need according to data from the American Association for Long Term Care Insurance.
If you waited until retirement, this price is quite low. In your 60's and 70's a long-term care insurance policy can cost between $2,000 and $4,500 per year depending on your various coverage options.
Planning for all of your retirement needs early can have a big impact on your finances. Talk to a financial advisor today to build a personal plan.
Long-term care insurance is a policy that pays for ongoing support services.
Most often long-term care will pay for either in-home assistance, such as a visiting nurse, or stays in a medical facility, such as assisted living or a nursing home. Most people need insurance, Medicaid or some other source of funds to pay for this. Depending on the nature of your services, long-term care can cost between $5,000 and $8,000 per month plus additional expenses.
All of this returns to our headline question, is $2,000 per year a reasonable price for long-term care insurance?
The answer is, it depends. Returning to the data from the American Association for Long-Term Care Insurance, a few average policy prices for representative profiles include:
Age 55, Single Male, $165,000 Coverage, No Inflation – $900/year
Age 55, Single Female, $165,000 Coverage, No Inflation – $1,500/year
Age 55, Single Male, $165,000 Coverage, 2% Inflation – $1,650/year
Age 55, Single Female, $165,000 Coverage, 2% Inflation – $2,725
So, say you are a woman in her 50's who would like a policy that adjusts for benchmark inflation. With that profile, $2,000 per month is a good deal. On the other hand, $2,000 per year is somewhat overpriced for a similarly-situated man.
Then there are the prices if you wait until retirement age:
Age 65, Single Male, $165,000 Coverage, No Inflation – $1,700/year
Age 65, Single Female, $165,000 Coverage, No Inflation – $2,700/year
Age 65, Single Male, $165,000 Coverage, 2% Inflation – $2,600/year
Age 65, Single Female, $165,000 Coverage, 2% Inflation – $4,230/year
Here, your $2,000 offer is almost certainly a good deal unless you are a man who does not want to index their benefits to inflation, which is likely a bad decision.
Long-term care insurance is a key part of retirement planning. It's expensive, but the care it covers can be essential. While it might be hard to budget for this insurance in retirement, it will be even harder to budget for the nursing home itself.
Talk to a financial advisor today about your long-term care insurance needs.
Long-term care is priced based on the same underlying logic as all health insurance. The more services you need, and the sooner you will need them, the higher your premiums will be. Some of the most important factors include:
Your age when you buy the policy
Your life expectancy
Amount of coverage
Inflation adjustment of coverage
Your state and its health care costs
The earlier you purchase care the cheaper your premiums will be, because you will hold the insurance longer before using it. The longer your life expectancy, the higher your premiums because you will likely use more care overall. For this reason, long-term care is generally more expensive for women than for men because women have longer life expectancies.
Long-term care covers your costs up to a limit, and the higher this coverage limit the more expensive your policy will be. An average policy offers $165,000 in coverage. For an additional premium you can have that coverage indexed to inflation. This will increase the coverage at a set rate each year so the policy retains its spending power.
Inflation adjustment is, generally, essential.
Finally, your state and region will determine the costs of your overall care. For example, according to New York Life Insurance, it costs an average $8,071 to stay in an assisted living facility in New York City. That same stay in a rural area of North Dakota would cost $3,179. This will determine the amount of coverage you need, as well as policy requirements and prices.
A financial advisor can help you determine an appropriate premium.
Long-term care insurance is expensive, and for many people $2,000 is a very good price. Let's break down how these policies work, and what you should pay.
Don't forget to make sure your health care is covered too. Depending on when you retire, you may need to cover this yourself for a while, so budget for those costs too.
A financial advisor can help you build a comprehensive retirement plan. Finding a financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.
Photo credit: ©iStock.com/Inside Creative House
The post I Was Quoted $2,000 Per Year for Long-Term Care Insurance. Is That Too Much? appeared first on SmartReads by SmartAsset.
Families of former beneficiaries claim UnitedHealth's AI system "aggressively" rejected claims for medically necessary expenses.
A lapse in coverage can have serious consequences. Here’s how to avoid a lapse in coverage – and what to do if it does happen.
Citigroup is eliminating more than 300 senior manager roles as part of CEO Jane Fraser's efforts to simplify the Wall Street giant. Sonali Basak has more on "Bloomberg Markets." Follow Bloomberg for business news & analysis, up-to-the-minute market data, features, profiles and more: http://www.bloomberg.com Connect with us on… Twitter: https://twitter.com/business Facebook: https://www.facebook.com/bloombergbusiness/ Instagram: https://www.instagram.com/quicktake/?hl=en
The [round of layoffs](https://www.wsj.com/livecoverage/stock-market-today-dow-jones-11-20-2023/card/read-jane-fraser-s-memo-to-citigroup-staff-on-restructuring-Rl6qkzVjED3QXnIj4KE8) beginning at Citigroup this week may be painful. On that front, it actually isn’t out of line with peers: Its compensation ratio, or what it pays employees as a percentage of revenue, was around 37% in the third quarter, according to Visible Alpha—roughly the same as Bank of America and U.S. Bancorp, and below Wells Fargo. Cutting what it spends on staff is really only the front-facing part of [what Citigroup more broadly needs](https://www.wsj.com/finance/banking/what-could-finally-turn-around-citigroup-36ae885b), which is core simplification and de-sprawling.
If you qualify to participate in a non-qualified deferred compensation (NQDC) plan, you may want to pay attention closely. These accounts can offer high-earners who have maxed out their traditional retirement savings options an appealing opportunity to set aside a substantial portion of their income and invest it on a tax-deferred basis. In a new […] The post This Little-Known Account Can Help High Earners Accumulate Wealth appeared first on SmartReads by SmartAsset.
Normally when you hear the word tax haven, the typical places spring to mind. The Cayman Islands, Switzerland, Panama and the Bahamas are all tax havens, but over the course of the past decade South Dakota has joined their ranks … Continue reading → The post This Hidden U.S. Tax Shelter Is Not Just for the Global Elite – Want In? appeared first on SmartAsset Blog.
While the S&P 500 itself has had a great three-week run, plenty of the index’s components have done even better. The index was in the red one week and one month out for the first and last of those periods; nonetheless, it was higher eight weeks later in all three of those instances.
I am feeling hopeless. I am 60 years old and have only $15,000 saved. I will get a 80% pension from the state of Massachusetts and be able to retire in three years. What can I possibly do to increase my savings now? – Joy There's no question that $15,000 is a small amount of […] The post Ask an Advisor: I’m 60 and ‘Feeling Hopeless’ With Just $15k Saved. What Can I Do Now to Increase My Retirement Savings? appeared first on SmartReads by SmartAsset.
I'm a 65-year-old preparing for retirement within the next three to five years. I'm looking at different types of retirement funds. Would adding stocks that are dividend-structured along with gold and cryptocurrencies be a good mixture? -Earl Shifting from building … Continue reading → The post Ask an Advisor: I'm 65 Years Old and Going to Retire Soon. How Should I Structure My Portfolio? appeared first on SmartAsset Blog.
Investors have their eye on Nvidia, which will report third-quarter earnings tomorrow amid a wildly successful year so far.
(Bloomberg) — The S&P 500 Index is set to rise toward its all-time high early next year, pullback midyear and then rally back toward the highs, according to strategists at Societe Generale SA.Most Read from BloombergCitigroup Cuts Over 300 Senior Manager Roles in Latest RestructuringNearly All of OpenAI Staff Threaten to Go to Microsoft If Board Doesn’t QuitThe Doomed Mission Behind Sam Altman’s Shock Ouster From OpenAIMicrosoft Ends Weekend of OpenAI Drama With Coup of Its OwnTech Giants Roar
Investors raced to reinstate Altman after the OpenAI board fired him Friday. But Elon Musk says for AI safety reasons the true reason for the firing must be revealed.
Nvidia, a giant in data centers and gaming, is supercharging investor interest in artificial intelligence. Is Nvidia stock a buy, with earnings due tomorrow? On Nov. 13, Nvidia unveiled the highly anticipated H200, its latest graphics processing unit for training AI (artificial intelligence) models.
This month's list of new buys by the best mutual funds once again shows that the artificial intelligence boom is not over. Top money managers placed massive bets on AI stocks Amazon.com and Palantir. Driving that demand, Amazon delivered 236% earnings growth in the third quarter, while Palantir's 600% EPS growth continues to propel PLTR stock to a fresh breakout and beyond.
Can these well-known companies be the market darlings of 2024?
You've no doubt heard of the Magnificent Seven stocks driving most S&P 500 gains. But what about the world's top 10 stocks?
(Bloomberg) — Chinese developers’ bonds gained along with their shares after authorities began drafting a list of 50 real estate firms that would be eligible for a range of financing as Beijing sought to support the embattled property sector.Most Read from BloombergCitigroup Cuts Over 300 Senior Manager Roles in Latest RestructuringNearly All of OpenAI Staff Threaten to Go to Microsoft If Board Doesn’t QuitThe Doomed Mission Behind Sam Altman’s Shock Ouster From OpenAIMicrosoft Ends Weekend of
Baidu’s results beat estimates after China’s internet search leader expanded into new businesses such as AI to shield itself from an economic downturn.
I'm 73 and my 401(k) hasn't been doing well for the last few years. Would it be a good idea for me to withdraw my money from my 401(k) and pay the tax that I will have to pay eventually anyway, and then invest the rest of my money in CDs? -Archie Your desire for […] The post Ask an Advisor: I'm 73 and My 401(k) ‘Hasn't Been Doing Well.’ Should I Withdraw My Money and Invest in CDs? appeared first on SmartReads by SmartAsset.
But Latin America’s third-largest economy is broke and lacks funds to swap the nearly worthless peso for the greenback.