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Worried About Outliving Your Money? Long-Term Care May be the Answer

Older man standing next to a table with a plant on it while he looks out of his window with a somber look on his face.

You work hard and save for decades, building a nest egg that you can live off in retirement. You may know how much monthly retirement income you need to cover your day-to-day expenses, but have you considered what would happen if your daily expenses increased exponentially due to needing long-term care?

In honor of National Long-Term Care Awareness Month, keep reading for important information you need to know about long-term care and how to protect your money.

What is Long-Term Care?

There may come a day down the road when you need help taking care of yourself due to chronic illness, disability or simply aging. Long-term care is the assistance you need if you’re unable to perform critical day-to-day activities on your own such as eating, bathing, dressing, transferring, toileting or continence. Roughly 70% of people aged 65 and older will need some type of long-term care during their lifetime.1

Some people rely on family members for help with personal care, but that’s becoming less common due to physical, financial and geographical limitations. That’s why many retirees rely on professional help. Long-term care assistance can be received in a variety of settings, including in your own home, in the community or at a facility.

How Much Does Long-Term Care Cost?

For many retirees, long-term care is the most expensive cost they’ll face in retirement. Check out these average daily costs of care in the U.S.:2

  • Homemaker services: $163 per day
  • Home health aide: $169 per day
  • Assisted living facility: $148 per day
  • Semi-private room in a nursing home: $260 per day
  • Private room in a nursing home: $297 per day

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How Will I Pay for Long-Term Care?

As you can see, long-term expenses can quickly add up and create a scenario where you outlive your money. For example, if you need a homemaker service to help you out twice a week with preparing meals, organizing medications and bathing, you could spend around $1,300 per month, which is nearly half of the maximum Social Security benefit you could receive.3

Medicare doesn’t cover most long-term care, so here are ways retirees cover these costs:

  • They meet financial eligibility for Medicaid.
  • They spend the money in their health savings account (HSA).
  • They spend other savings or tap into the equity they’ve built up in their home.
  • They rely on family to help cover the costs, which could prevent loved ones from prioritizing their own retirement savings.
  • They use long-term care insurance, which is an insurance policy that’s designed to help you pay for the services you need.

What Can I Do Now to Prepare for Long-Term Care?

People often kick the can down the road when it comes to preparing for long-term care, delaying taking action until they’re confronted with needing care services. However, planning ahead can help ensure you will be able to afford the care you need without depleting your savings. Here are three simple things you can begin doing today to prepare for long-term care:

  1. Start putting aside savings in an HSA.
  2. Talk to an insurance agent about long-term care insurance. The best time to secure coverage is when you’re younger and healthier. That’s why many people purchase long-term care insurance in their 50s.
  3. Talk to your loved ones about your long-term care wishes.

We hope this article helps you think ahead about the personal care you may need in the future and take steps today to be prepared!

Interested in making some extra money in retirement? Check out our blog 10 Part-Time Jobs to Supplement Retirement Income

Colonial Penn is here for you!

Colonial Penn has specialized in making life insurance simple and accessible by offering it directly to consumers since 1957. Click here to learn more.

1U.S. Department of Health and Human Services, How Much Care Will You Need?,, 2020., Nursing Home Costs in 2023, 2023.
3Social Security Administration, What is the maximum Social Security retirement benefit payable?, 2023.

Colonial Penn is a private company that is not Medicare, Medicaid or MaineCare and is not a governmental agency

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