Long-term care costs continue to rise. Learn more about this important aspect of retirement planning.
Long-term care is an often overlooked aspect of retirement planning, but a new MetLife report indicates investors can ill afford to ignore the rising costs of extended care services.
National average rates for long-term care continue to rise, according to the10th annual MetLife report on rates for nursing home, assisted living, adult day services and home care. Over the past five years, annual costs for a private room in a nursing home have increased at an average annual rate of 4 percent, according to the MetLife report released last week. Assisted living costs have increased an average annual rate of 4.1 percent over the same period, while home health aide services rose at an average annual rate of 1.2 percent.
In 2012, a semi-private room in a nursing home cost an average of $222 a day or $81,030 a year, a 3.7 percent increase from 2011. “This year’s cost increases come on top of significant escalations from 2010 to 2011 and previous years. These costs, added to the health care inflation rate, which currently hovers around 4 percent, can derail a family’s financial security,” Sandra Timmermann, head of the MetLife Mature Market Institute, said in a statement. “
Some of the increase is attributed to rising energy and employment costs, as well as higher overall operating expenses, Timmerman said. “Those planning for long-term care for themselves or their parents will do well to consider such pricing, and to save and invest bearing in mind that these expenses have a history of rising measurably from year to year.”
Main Street households are likely to engage in retirement planning, but often fail to factor in long-term care costs, according to ongoing Millionaire Corner research. More than half (53 percent) of Main Street investors, those with investable assets of $100,000 up to $1 million, have worked with an advisor on retirement planning. While 15 percent plan to seek retirement planning advice in the future, and 32 percent say “they don’t need this type of advice.”
Main Street investors are even less likely to work with an advisor on planning for long-term care. One-third has worked with an advisor on long-term care planning, while 29 percent plan to seek this advice in the future and 38 percent indicate they don’t need this type of advice. Yet, rising costs indicate that long-term care costs are a vital component of retirement planning.