The Rising Cost of Long-Term Care
If I end up needing long-term care, how much would it cost?
It depends on what type of care you need and where you live. On average, the daily cost of a private room in a nursing home is now $219, which adds up to nearly $80,000 per year, according to a new study by the MetLife Mature Market Institute. A private room in an assisted-living facility now averages $3,131 per month. And home health aides charge $21 per hour, on average.
The prices vary a lot by location. For example, the average cost of a private nursing-home room is $171 per day in Alabama, but it’s $286 in California. Average monthly assisted-living costs are $4,365 in Maine but $2,568 in Louisiana. And home health aides charges an average of $28 per hour in Phoenix but just $14 in Birmingham, Ala. See the full list of costs by location in the MetLife Mature Market Institute study.
No matter where you live, such expenses could quickly eat away at your retirement savings because Medicare doesn’t cover long-term care. And keep in mind that the costs are likely to be much higher by the time you need care -- especially if you’re in your fifties or sixties now. The average cost of a nursing-home room increased by more than 3% last year. If prices continue to rise at that rate, one year of nursing-home care could cost nearly $170,000 in 25 years, when a 55-year-old is likely to need care. Care in your home may cost even more -- and those rates rose 5% last year.
Long-term-care insurance can protect your savings from burdensome bills. Policies are now less expensive than previous versions, yet they still provide enough coverage for most people’s long-term-care needs. See How to Minimize Long-Term-Care Premiums for details. However, be sure to include some form of inflation protection with your long-term-care policy because the cost of receiving care continues to rise.
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