Helping a loved one navigate through the long term care puzzle can be emotionally draining, time consuming, and downright frustrating. In addition, learning about the associated costs can be like throwing salt on a very open wound. Unless a money tree is growing in the backyard, finding a way to pay for long term care costs can be a major struggle for families.

Thankfully, companies like Genworth do the research for us and provide Cost of Care Surveys to help us set appropriate expectations. Here are the annual median costs for the Denver* area for 2015:

$50,336      Homemaker Services
$52,578      Home Health Aide Services
$17,290      Adult Day Health Care
$51,000      Assisted Living Facility (One Bedroom- Single Occupancy)
$88,695      Nursing Home (Semi-Private Room)
$103,295    Nursing Home (Private Room)

Considering these are the costs in 2015, you may wonder what they may be in the future. Here are the same annual costs in 20 years, inflated at a 5% cost of living adjustment:

$133,556     Homemaker Services
$139,505     Home Health Aide Services
$45,876      Adult Day Health Care
$135,318      Assisted Living Facility (One Bedroom- Single Occupancy)
$235,334     Nursing Home (Semi-Private Room)
$274,072    Nursing Home (Private Room)

According to a Huffington post article, “At some point in their lives, 70 to 75 percent of people over the age of 65 will need some form of long-term care.” This leaves us to wonder how we are prepared to handle these costs and what kind of effect this may have on our estate.

There are two main ways to approach this potential expense. One of the options is to transfer the risk to an insurance company with the use of a long-term care insurance policy. Although we have found some policies to have a reasonable premium for the associated benefit, some policies do not. Overall, these policies can be rather expensive and difficult to obtain given the underwriting standards.

Another option is to self-fund for potential long-term care costs through investments, pensions, savings accounts, or possibly equity in a home. With this option, money is saved or earmarked for this goal rather than spent on insurance premiums. However, the biggest question is: will there be enough? The risk is that long-term care costs for one spouse may deplete the assets remaining for the other spouse.

As you can see, this is not a “one size fits all” answer. Consider reviewing your personal situation with a fee-only Certified Financial Planner™. Call Sharkey, Howes & Javer at 303-639-5100 to schedule a complimentary consultation with one of our nine CFP® professionals.



* The Denver metro area includes the following counties: Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park.

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