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More Planning for Long-Term Care Prior to Retirement

As a result of advances in medical care, more adults in the United States are living longer lives, into their 80s, 90s, and even past 100.

When you live a long life, the chances of needing long-term care increase significantly and most people are not prepared, declares Bonita Williams, President of The Tandem Group®, Inc. Long-term care is not covered by traditional health insurance and little, if any, is covered by Medicare. The need for long-term care can quickly wipe out a lifetime of retirement planning, she states. A failure to plan is simply a plan to fail.


As a result, an increasing number of consumers are looking into their options, including long-term care insurance. Williams points to a new study of long-term care insurance buyers conducted by the AALTCi (American Association for Long-Term Care Insurance), the national professional organization. Nationally, just over eight million Americans now have some long-term care insurance in place.

In 2010, 81% of individuals purchased new policies before turning age 65, Williams notes. Over half of area consumers purchase their coverage between the ages of 55 and 64 when they can still meet the good-health requirements and qualify for significant discounts.

Consistent with national trends reported by the study, there was greater local interest in options that reduced the cost of coverage. In 2010, over half (52%) of buyers selected insurance protection that would cover a claim lasting at least four years or less.

According to Genworth Financial, the 2011 median annual rate for a private nursing home room was $77,745. In 2005, the median annual rate for a private nursing home room was $60,225, meaning that Americans can expect to pay approximately $17,520 more per year today for a nursing home than they had to pay in 2005. This increase represents a 4.35% compound annual growth rate over that period.

While nursing home care costs increase each year, more of our clients recognize they are able to cover some of the risk and insure against the portion they are not able to pay for, Williams states. Transferring the risk from yourself to an insurance company is always better than assuming all of the financial risk for you and your family.

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