As a result of the distinct financial challenges women face as they age, often shaped by factors such as longevity, earnings, and workforce participation, planning for long-term care (LTC) is a crucial consideration. Statistically, women tend to live longer than men, earn less over their lifetimes, and spend fewer years in the workforce. These financial concerns become more pronounced for older women who are divorced, widowed, or single, particularly those who have dedicated a significant portion of their adult lives to caring for children or other family members.
Long-term care provides essential support services to assist with activities of daily living, including dressing, bathing, eating, transferring, and toileting. Women who experience difficulties performing two or more of these activities due to physical limitations, cognitive impairments, or both may require LTC. These services can be provided in various settings, including community-based care, assisted living facilities, or nursing homes.
However, the actual costs associated with LTC often surprise many. For example, the 2017 Genworth Cost of Care Survey indicates that the average annual cost of a nursing home is $97,452, while assisted living averages $3,750 per month. Recognizing that these figures are national averages is important, and actual costs can vary significantly depending on the state. LTC expenses are likely to exceed the national average in areas with a high cost of living.
Several key factors underscore the importance of LTC planning for women:
- Women Tend to Live Longer: Historically, life expectancy has increased for both men and women. However, women generally live five years longer than men, which increases the likelihood of health challenges as they age. The American Association of Retired Persons (AARP) notes that more women than men reside in nursing homes, and women are also more prone to disabilities or chronic health conditions.
- Financial Resources Are Often Insufficient: According to the U.S. Department of Labor (DOL), the average full-time employed woman in the United States earns less than her male counterpart. In 2016, women earned just 80 cents for every dollar earned by men. Additionally, women typically spend nearly 12 years out of the workforce caring for children or elderly parents. This combination of lower earnings and disrupted careers often hampers their ability to save adequately for the future, leaving them financially vulnerable and in need of proactive planning.
- Lower Social Security Benefits: Shorter careers and lower incomes often result in reduced Social Security benefits. AARP reports that, in 2015, the average annual Social Security income for women aged 65 and older was just $14,184. Additionally, married women may be unaware that their spouses’ benefits could be reduced if they become widowed or divorced. Without proper planning, these factors can put women at a higher risk of financial insecurity in their later years, emphasizing the need for long-term financial planning.
Many women believe that their children or other relatives will be able to provide care if the need arises. However, the financial burden and required medical expertise often exceed the capabilities of the average family. Therefore, it is essential for women to proactively plan for their future long-term care needs.
Exploring the LTC Insurance Solution
Fortunately, there is a solution: long-term care insurance. This type of insurance can help cover the costs of LTC before you meet the stringent requirements for Medicaid eligibility. Medicaid is a joint federal and state program that helps with medical costs for some people with limited income and resources. Many policies cover nursing homes, assisted living facilities, adult day-care centers, and home care expenses. The cost of LTC insurance generally depends on factors such as age, health, and specific policy features, including the scope of coverage, levels of care, and duration of benefits. LTC insurance is designed to help maintain independence and quality of life while providing a broader range of care options.
While it may be challenging to prepare for needing LTC, planning today can help protect your assets, provide greater care options, and, most importantly, offer peace of mind for you and your loved ones. Start by researching LTC insurance options, understanding your potential future care needs, and consulting with a financial advisor to create a comprehensive plan.
At Legacy Private Trust Company, we understand the complexities of planning for long-term care and are here to guide you through the process. Our team is committed to helping you make informed decisions that align with your unique circumstances and long-term financial goals. We encourage you to reach out to us or a trusted financial advisor to start planning for your future long-term care needs today.
If you are a Legacy client and have questions, please do not hesitate to contact your Legacy advisor. If you are not a Legacy client and are interested in learning more about our approach to personalized wealth management, please contact us at 920.967.5020 or connect@lptrust.com.
This newsletter is provided for informational purposes only.
It is not intended as legal, accounting, or financial planning advice.
