Americans are living longer. That sounds good, and there’s no question that it’s better than the alternative. But the downside is that the longer you live, the greater the odds you’ll need some kind of assistance just to maintain your day-to-day existence. That can range from having a health aide come to your home to living in an assisted living residence or a nursing home. Collectively, those are called Long Term Care.

While a lot has been said about the high cost of health care, at least there is a mechanism for seniors to deal with that: Medicare.

When it comes to dealing with Long Term Care costs, you’re pretty much on your own. (A lot of people think that they can just let Medicaid--a state program for the indigent--pick up the tab if they end up in a nursing home. But as Laurence Kotlikoff of Boston University points out, "Medicaid will wipe you and your spouse out financially" before it kicks in. So unless you’re prepared to die destitute, don’t count on it).

And Long Term Care isn’t cheap. The MetLife Market Survey of Nursing Home and Assisted Living Costs found that living in an assisted living facility costs anywhere from $1100 to $7500 a month. As for a semi-private room in a nursing home—that ranges from $125 a day in Oklahoma to $566 a day in Alaska (that’s right, per DAY)…with a national average of $191 a day.
With rates like that, unless you’re a Bill Gates or Warren Buffett, it doesn’t take that long a stay to exhaust your financial assets. And if you want to leave something to your spouse or kids, it’s something to be concerned about.
So what can you do? One possibility is to take out Long Term Care insurance. To quote Professor Kotlikoff again, "Yes the policies cost a fortune, but buying one may be the best of a set of bad options."

In his book, "Spend ‘Til the End," Kotlikoff suggests you ask some questions in considering a policy, including:
-- What will the policy cost me in today’s dollars now and down the pike?
-- Is the benefit fully adjusted for inflation?
--What if I need home health care not nursing home care? Can I get coverage for both?
--How long will coverage last? Is there a maximum daily benefit?

Clearly, Long Term Care is something that everyone who’s about to retire needs to care about. That’s why we’re devoting two segments of NBR's "Get Your Finances Ready for Retirement" to it. So be sure to tune in on Monday, February 2 and Monday, February 9.