| 30 June 2010
Fidelity Investments publishes an annual study, the Retiree Health Care Costs Estimate, which found a 65-year-old couple retiring in 2010 will need $250,000 to cover health care expenses, not including a nursing home. This estimate is up 56% from when this study started in 2002; the 2002 estimate was $160,000. While this is only an estimate, it is alarming that the number is climbing this fast and many people have not had a discussion with their family about what their long-term care plan is. A long-term care plan, in my mind, is about your health care, not just insurance.
Health care costs are becoming a large piece of the retirement planning puzzle. The common misconception by many is that Medicare will cover nursing home or in-home care costs when in reality, it will only help on that front for the first 100 days of care, and then only to a limited amount. This brings up questions that every family needs to answer about the trade-offs between spending money now on premiums for insurance coverage - from Medicare supplements to long-term care insurance - versus the potential costs to a family forced to share the duties of helping an aging parent.
The health care landscape is changing rapidly which only adds to the anxiety of what the future looks like. What is apparent is that both government and corporations are pushing more of the responsibility on each of us personally. And while pundits talk about retirement costing less, it is apparent to us that it often costs the same, or even more when health issues come into play, then when people were working.
Thus, sit down with your family and have a health care discussion that fits your personal lifestyle. Issues every family needs to address include Medicare supplements, long-term care insurance, a health care directive, and a real game plan for which family members are responsible for helping in times of need. For instance, some families may have a child who is a nurse, so make sure the long-term care insurance would pay out if a family member wanted to quit their job to become a dedicated nurse to mom or dad. Or maybe parents travel a lot and children are not with them, then the parents better have medical evacuation coverage so they can be flown back to the hospital of their choice. Whatever the issue, discuss the family's long-term care plan so everyone does not feel like they are playing a game of hot potato.
This discussion is no different than planning one's retirement or next vacation. The power is not in the plan, it is in the planning. The plan is only as good as the conversation but today, so many choose to not have the conversation until someone is sick, and then everyone scrambles. Take the time this July 4th to have this discussion with your family, whether you are the child or the parent. You will find comfort in knowing you are taken care of, and you will find comfort in knowing you are taking care of others.