Long-term care costs have risen dramatically across the nation over the last few years, and California residents are no stranger to the sticker shock that comes with the increased costs.
In California, the average cost to care for a patient in a skilled nursing facility is $110,960. However, costs differ drastically depending on the location. For example, in El Centro, the median cost of a private room in a nursing home is $88,753 annually, but in Sacramento, the median cost is a staggering $164,250 per year. Assisted living costs also vary drastically. In Bakersfield a private room in assisted living costs $43,350 per year, compared to $64,740 in Sacramento annually. Full-time in-home help ranges from $50,336 in El Centro to $70,356 in Sacramento per year. (1)
Despite the costs, long-term care facilities are busy. Currently, over 1,200 long-term care facilities are serving more than 400,000 Californians. (2)
No matter where you live in California and what kind of assistance you may need, nothing about long-term care is cheap. Additionally, 52% of Americans over 65 will need long-term care in their lifetime, so it is very likely that you or your spouse will need long-term care in the future. (3)
Many of my clients have questions about preparing for long-term care. Below, I try to answer a few of the more general questions I get from clients who are concerned about these rising costs and how it will affect their wealth management plan.
Planning For Long-Term Care
Now that we have established that long-term care is something you or your spouse could need in the future, one remaining question you may have is how and when do you prepare for long-term care?
Like many forms of life insurance, long-term care insurance is more affordable when you purchase it when you are younger. Additionally, the older you are, the more likely it is that you will have developed a serious medical condition which could render you ineligible for a lower cost plan or make it more difficult for you to get coverage at all.
Most financial advisors recommend purchasing long-term care coverage years before you reach the typical retirement age of 65, and generally advise their clients to start considering the insurance when they are in their 50s.
What Are Your Options?
In California, there are two types of long-term care insurance: traditional long-term care insurance and hybrid long-term care insurance. Of course, there are benefits and drawbacks to each policy, and any specific question about whether a policy would work for your specific situation should be directed to your financial advisor. But here’s what you need to know about both of these options.
Traditional Long-Term Care Insurance
Typically with this type of long-term care insurance, you pay an annual premium for the long-term care coverage. And if you need long-term care due to long-term illness, either cognitive or physical, the policy will pay for your care.
Hybrid Long-Term Care Insurance
This type of long-term care insurance has the benefits of life insurance with long-term care coverage. When you purchase a hybrid plan, you are insured if long-term care is ever needed. If you never need long-term care, the hybrid plan will pay a death benefit to your beneficiary, which is likely to be similar to the amount of the policy.
I’m Here For You
Planning for your future can be overwhelming because there is an array of unforeseen factors that could play a part in your retirement. Unfortunately, no one has a crystal ball that accurately predicts what the future holds, but I can make sure you are well prepared for almost anything. Email me at email@example.com or give me a call at 916-276-8677 to see if I am the right fit to help you pursue your ideal financial future.
James Callens is a financial advisor at GLH&C Financial Services, a full-service, comprehensive wealth management firm. Jim has over 30 years of experience in the financial industry and uses his extensive resources, knowledge, and experience to help his clients experience simplicity and clarity in their financial life. Jim spent over 20 years working for GE Financial Advisors, both in their insurance services department and as a regional manager and financial advisor. He took part in GE’s Six Sigma Quality Training program and completed the National Association of Life Underwriter’s four-year LUTCF course. Jim also earned his certificate in financial planning from the University of California at Davis. In 2011, Jim combined his own firm, Callens Financial Group, with GLH Financial Services, creating GLH&C Financial Services, so he could provide even more value to his clients.
Jim is a member of the Financial Planning Association of Northern California and National Association of International & Financial Advisors (NAIFA). He has served as a board member of several nonprofit organizations and has been involved in Cub Scouts leadership and youth sports coaching. Jim lives in Folsom, CA, with his wife, Melissa, and his four children, Jacob, Kristen, Grant, and Andrew. Together, they enjoy outdoor activities such as kayaking, bicycling, and vacationing at Lake Tahoe. To learn more about Jim, connect with him on LinkedIn.