Mar 12 / Jay Zigmont, PhD, MBA, CFP®

How do I plan for long term care?

No one likes to think about needing to go into long-term care, like assisted living or a nursing home, but that ends up being the reality for a lot of people. If you're Childfree, you'll have to navigate this for yourself. While it's true that even people with children often end up in nursing homes, they don't always, thanks to having more options for family care. The costs involved for this kind of care are steep, but here's what to consider and how to approach planning for long-term care.

How much will it cost?

It's probably best to discuss the costs first, before looking at how to pay for it. If you want someone to care for you in your home, you'll be paying for an average of 44 hours per week, amounting to about $5,000 a month. For assisted living, you're looking at about $4,500 a month. For nursing care (and a private room in a nursing home), $9,300 per month. The costs vary based on where in the country you are. For example, Missouri is the cheapest, at $5,900 for a private room in a nursing home. Alaska is $31,000, however. 

On average, males will require 2.2 years of care, while females require 3.7 years (women live longer). And the longer you wait to plan for this, the more it will cost. Long-term care costs are cheapest when you start to plan for and pay for them (in the form of insurance; more on that below) when you're between the ages of 40 and 50. So how are you going to pay for care?

Medicaid or Investments

Your regular health insurance will not cover long-term care, so that's out. Medicare does not cover long-term care costs of any kind, so that's off the table (if you needed short-term care, say, for rehabilitation after a hospital stay, Medicare would cover some of that).

Medicaid will cover costs, but it is administered by individual states and there are strict requirements for income and assets – so you would be in the awful position of needing to spend down your assets to qualify. And there's a five-year "look back" rule, as well, to prevent abuse of the system. If you're found to have given away assets or sold them for less than market value in the previous five years before you apply for Medicaid coverage, you'll have an extended waiting period. And facilities paid for by Medicaid aren't generally the nicest ones to be in.

You can plan to save money and invest it to cover your long-term care costs, but that's something you need to do sooner rather than later, to give your money time to grow and ride out short-term market fluctuations and cope with inflation. If you don't have a lot put aside from retirement, the cost of long-term care will definitely have a big impact. A CERTIFIED FINANCIAL PLANNER™ can help you work out the numbers if you decide to go this route (and can afford to save and invest to cover costs). 

Long-term Care Insurance

A good solution for many people is long-term care insurance, but it isn't a cheap solution. If your parents have Alzheimer's or dementia, you won't be able to get this coverage. It is more expensive for a single woman than for a single man or a couple. If you lock in a policy when you're younger (say, in your early 40s), it will cost you several thousand dollars a year. It'll only get more expensive the longer you wait to get a policy.  

It's best to work the costs of the policy into your annual budget, so you don't have to worry about it. And to figure out your costs, you'll have to decide how many years of coverage to buy. Some plans also cover home care and the services of a Geriatric Care Manager, who will coordinate the care you need. These services are worth planning and buying an insurance policy for.

Opting Out Altogether

Another option to plan for long-term care is morbid, but many people in the Childfree community consider it seriously. You can opt for euthanasia. The laws around this vary, and depending on where you live in the U.S., you may need to travel. Discuss this option with a lawyer and see what kind of planning and paperwork is required. 

Clearly, there's a lot to consider when it comes to planning for your old age. Get in touch with a CFP® professional for help running the numbers and making a plan that works for you and your budget.
Jay Zigmont, PhD, MBA, CFP® is the Founder of Childfree Wealth®, a life and financial planning firm dedicated to helping Childfree and Permanently Childless people. Dr. Jay is a CERTIFIED FINANCIAL PLANNER™, Childfree Wealth Specialist®, and author of the book “Portraits of Childfree Wealth.” Dr. Jay is the co-host of Childfree Wealth Podcast. His Ph.D. is in Adult Learning from the University of Connecticut.

He has been featured in Fortune, Forbes, MarketWatch, Wall Street Journal, New York Times, Business Insider, CNBC, and many other publications.