A man aged 50 today has a life expectancy of approximately 30 years, with women expected to live for 33 additional years. Given these projections, we are more likely to require long-term medical care as we age. Data suggests that someone who is 65 has a 70% chance of requiring long-term care.
As Generation X individuals (born between 1965 and 1980) get set for the decades ahead, they should take potential long-term care circumstances and their financial implications into consideration. Hence, long-term care planning must be integrated into broader financial plans. Long-term care is typically associated with the constant care requirements of individuals exceeding usual medical treatment and recovery.
Long-term care costs are evolving, particularly as the cost of care increases. According to Steve Pedicini, a senior wealth advisor, the cost of care has increased from 3% to 10% in the past year, impacting long-term care insurance coverage. Despite being associated with long-term care insurance policies, the term “long-term care” refers to any service, assistance program, or support that can address care requirements.
Costs associated with long-term care are significant, with a home health aide costing an annual median of $80,080. Other options such as adult care centers carry an annual median cost of about $25,000.
Considering that nursing homes and assisted living facilities are the most expensive-costing around $129,575 and $74,000 per year respectively-it becomes imperative for Gen Xers to start planning and saving in their 40s.
Factors like witnessing their parents' need for long-term care have spurred many Gen X members to become serious about planning for their future care needs. Despite the financial constraints of simultaneously raising a family and caring for aging loved ones, Gen Xers are advised to begin saving for their future as early as they can.
Common strategies to mitigate the financial implications of long-term care include standalone long-term care insurance policies or a long-term care rider on an existing life insurance policy, both dependent on an individual’s current health status.
With planning and preparation, it is possible to ease the long-term financial burden while offering peace of mind as Gen X members approach retirement.