Long-Term Care: Families Face Steep Costs Even When It's 'Free'
Skilled care --
whether at home, in an institutional setting or by a professional caregiver --
is one of the most significant financial demands clients face in retirement,
says advisor Joseph Birkofer with Legacy Asset Management, in Houston.
"The average person has a vague idea of long-term care expenses and a lot
of hope that their assets will cover them," he says. "They never sit
down and actually identify the specific financial demands of their retirement
days."
While professional
LTC is expensive, "free" care provided by family members can be
financially burdensome as well. Many people who end up relying on unpaid care
do so out of necessity, says Jesse Slome, executive director of the American
Association for Long-Term Care Insurance. "A significant number of people
wait too long and the cost gets too high," he says.
But family members
who end up acting as caregivers can incur losses of $303,880 on average for a
typical caregiver, according to an earlier Metlife study cited in AARP's 2015
"Valuing the Invaluable" report. This takes into account the loss of
wages and Social Security and pension benefit losses due to leaving the
workforce early.
Whether clients
choose unpaid care or rely on it out of necessity, it's important to understand
the hefty costs of such care.
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