When you think about retirement, you probably focus on the fun stuff first: time spent traveling, visiting grandkids or getting serious about a hobby that could turn into a new side gig.
But while you’re excited for the good stuff, it’s also important to be ready for the hard stuff — like how to cover the cost of long-term care and housing for the later retirement years. Although more than half of Americans (56 percent) say saving for long-term care is a top financial priority, a recent Northwestern Mutual study found that nearly three-quarters (73 percent) haven’t planned for their own long-term care needs. If you’re at a stage of life where you’re planning not only for yourself but also an aging parent, those concerns might become a reality sooner than you think.
So start preparing by first getting a handle on what some of the common long-term care options are and what they cost. Below are average costs based on data from the LTCG 2016 Cost of Care Study prepared for Northwestern Mutual.
The national average for a semi-private room runs $245 a day, while a private room averages $281 a day.
Most people will probably want to stay in their own home as long as possible, and home care can help make that happen. Home care includes home health aides that help with everyday tasks like bathing, getting dressed or going grocery shopping; as well as home health care professionals who can provide skilled services like nursing, physical therapy or pain management.
The cost of home care will vary greatly depending on whether you need skilled or unskilled home care. Skilled care costs significantly more: The national average for a registered nurse is $139 per visit, while a licensed practical nurse is $131 per visit. Home health aides, by contrast, average just under $23 an hour, though the cost can range anywhere from $17 in Alabama (the least expensive state) to $31 in Minnesota (the most expensive state).
Often, family members will try to avoid paying for home health aides by taking on those tasks themselves, but it’s important to remember that there are opportunity costs to that. For instance, in a 2015 AARP study, six in 10 caregivers who were also holding down a job reported having to make a workplace accommodation, including cutting back on hours or taking a leave of absence. That could mean lost wages, a hiatus in earning power and giving up plum employer benefits — like that 401(k) match that could help fund your own future retirement. Also, if you quit a job expressly to be a caretaker, you may not qualify for unemployment benefits. So it’s important to weigh both the real costs and the opportunity costs before making that decision.
ADULT DAY CARE
Adult day care offers care outside the home for people who may only need it during the day, while a family member or home health aide provides care at home in the evenings. Adult day care centers can provide meals and help with medications, as well as give people a chance to socialize with others. Transportation to and from the center may even be included in the cost. The cost of adult day care varies slightly depending on whether you’re looking for just social opportunities or require medical services.
The average national cost for the medical model is about $90 a day, while the social model averages $82 a day. In less expensive states like South Carolina, Oklahoma and Kentucky, average adult day care costs hover in the $60-to-$65 range, while more expensive states like New York, Vermont and Washington can range from $92 to $148 a day.
ASSISTED LIVING FACILITIES
Assisted living facilities can be a good choice for retirees who can't live completely independently but may not need the full care of a nursing home. They offer assistance with daily activities, such as cooking, laundry, housekeeping and transportation. Assisted living facilities will also typically offer social activities and health and exercise programs, as well as easier access to medical services. The cost of assisted living facilities will depend on the type of residential unit you want. Studios cost, on average, $4,027 a month; one-bedrooms, $4,560 a month; and two-bedrooms, $4,816 a month. That a means a year in an assisted living facility could cost you, on average, upward of nearly $58,000.
Of course, just like with rent and home prices, the cost of assisted living facilities vary greatly by location. For instance, the most expensive state for a one-bedroom is New Jersey, which averages $6,587 a month, while the cost is less than half that in North Dakota, where it’s $3,102 a month.
Nursing homes offer round-the-clock personal and medical assistance for those who can no longer take care of their daily needs.
The price depends on whether you want a private or a semi-private room: The national average for a semi-private room runs $245 a day, while a private room averages $281 a day — or about $89,000 to almost $103,000 a year. That’s expensive, but it’s still cheaper than hiring 24 hour care in your own home. Across the country, the state with the highest average was also in one of the most remote areas: Alaska, where a private room averages $536 a day. Connecticut and Massachusetts followed close behind, at $468 and $426 per month, respectively. States in the South, meanwhile, were among the least expensive for nursing homes: Louisiana, Missouri and Arkansas all had averages below $200 a day for private rooms.