Long-Term Care Insurance For Singles: Do You Really Need It?

Social Security and Medicare—along with retirement income from sources ranging from pensions, a 401(k), an IRA or even rental income—are things you probably consider when planning for retirement. You may also worry about stock market performance and the costs of getting older. For most people, the biggest threat to their retirement is not a stock market crash. You can recover from that. A bigger threat is the cost of healthcare. A long illness requiring around-the-clock care can devastate your finances and few are prepared to cover those costs. This is where long-term care insurance (LTCI) can be a life-saver both emotionally and financially. The question is, a single person, do you really need it?

The costs of long-term care (LTC) will vary widely depending on where in the country you live in. It can easily cost $8,000 per month ($96,000 annually) in many parts of the country. In Manhattan, the estimated cost is a whopping $405, per day, which is more than $147,000, per year. Those figures are well beyond the retirement income of the average American. The fact that few people have the resources to cover the cost of LTC may lead you to believe everyone should run out and buy some LTCI. However, those decisions are much more complex. In many cases LTCI is unnecessary, and in others, you are putting your spouse’s financial future at risk if you forgo it.

Singles and Long-Term Care

Would you believe singles now make up the majority of Americans? However, that includes widows and widowers, which is relevant since we are talking about end-of-life care. A study by the Boston College Center for Retirement Research asserts it will only make sense for the richest 20% to 30% of single (unmarried) people to purchase some type of LTC coverage or insurance. The study reported that individuals, not part of that richest group, will likely be better off going without care.

Additionally, the research gave estimates of the various lengths of nursing home stays for those who needed them. Using monthly statistics, as opposed to annual ones, it was discovered that people who went to nursing homes stayed there around 30% less than was previously thought. Nearly 45% of patients stayed three months or less? For the remaining 55%, it was reported that the average stay for a man was slightly less than a year. That compared to an average stay of 17 months for women. It’s important to note those were averages. My great- grandmother had around-the-clock care for nearly a decade before she passed.  That isn’t how I hope to spend the last decade of my life but at least she had the means to be adequately cared for.

On the flip side, many nursing homes stay end up being quite short. Often, a stay is right before death. I know that isn’t a happy thought but it’s better to talk about how when you are younger and healthier. Short visits may be covered by Medicare whereas stays, up to 100 days, may qualify for Medicare reimbursements.  Keep in mind that is unlikely to pay for the type of place you would want to visit if given a choice.  

 
Author:  David Rae
Source: Forbes Media LLC
Retrieved from: www.forbes.com
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