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A Guide to Funding Long-Term Care for Seniors

If you or a loved one will require any form of ongoing care, chances are you will need to self-fund this through a combination of savings and insurance. The problem is that, according to the Long-Term Care Poll, two-thirds of American adults have not started planning financially for their care needs in old age. If you are part of these two-thirds, now is the time to start.

How Much Does Long-Term Care Cost?

The quick answer is: it depends. It depends on what kind of long-term care you want for your old age, what kind of care you will require, and what kind of care you can afford. While most of us hope that the three will align, many of us don’t take the time to consider what we can do to make sure that this happens. More alarmingly, most of us tend to vastly underestimate the costs, skewing our perception of what we will be able to afford.

Before you make a decision, it is a good idea to familiarize yourself with what the different options are. Essentially, these can be split into two categories: home care and dedicated live-in facilities. In the case of home care, you pay for a caretaker and/or nurse to come to your house and help you with everyday tasks or medical needs.

In a dedicated facility, you move to a community for around-the-clock care from professionals. Not all of these facilities are created equal — for instance, an assisted living facility, retirement community, and nursing home are all very different experiences. The Genworth annual survey provides a breakdown of the average monthly price for each type of care — this can help you set an annual budget.

Savings or Insurance?

The most obvious way to fund long-term care is through savings. If you have an idea of how much money you will need to cover your care costs, you can plan to save a few years’ worth of care. However, insurance policies are another great way to self-fund for these costs and can provide more extensive coverage. On the other hand, using an insurance policy does involve spending money upfront which you may not end up using.

There are, of course, other ways you can help fund your long-term costs. For example, if you have a life insurance policy, you can actually sell it to free up cash, which you can then set aside for caretaking services or medical bills.

However, a health savings account is the best option if you want to build your savings, and it has the advantage of letting you use pre-tax dollars. It will not provide as much coverage as a long-term care insurance policy and cannot be used for people who have Medicare. For more information, check out this guide by US News details the pros and cons of both options.

As long as you have a general idea of how much money your long-term care is going to cost you, you will be able to plan your finances around that figure. This is why it is important to start thinking about this soon, so you are not caught out with expensive bills later on. The earlier you start thinking about these things, the more chances you have of being fully prepared for these expenses when they arise, so it pays to start early.

If you think that an assisted living or memory care community might be the right fit for yourself or a loved one, we invite you to visit or call one of our vibrant communities in Arizona and Utah. We are happy to be a resource for you as you go through this journey, regardless of whether or not you become part of the Avista family. We also recommend that you ask about our revolutionary Enhance Protocol™!

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