“Long term care is the largest risk facing seniors today”

I mentioned this quote from Money Magazine because of the article I read this week in USA Today. They reported that most Americans were unaware of how much healthcare will cost when they retire and what exactly Medicare covers.

The pre-retirees who expect healthcare to be their biggest retirement expense estimated that their average annual healthcare cost will total $5,621. But that is a drastic underestimate. Citing a 2011 Fidelity study, Nationwide says out-of-pocket health care expenses will average as much as $10,750 a year.

One big reason is that pre-retirees often wrongly assume that Medicare covers the cost of long-term care. It DOES NOT! And nursing home care can cost upwards of $7000 a month! This should be a wake-up call that Americans need good financial advice to prepare for their future health care costs, he says.

 In addition to long term care, Medicare does not cover eye care, dental care and hearing aids.

People also don’t realize that Medicare will be financed partly by premiums deducted from Social Security checks. Depending on your income, a retired couple’s annual Medicare premiums could be over $9,000 a year.

Ninety percent of estates are spent this way: 1) nursing home, 2) IRS, 3) children, 4) grandchildren, 5) charity. More people are worried about the IRS taking their money than about having to spend it on a nursing home.

With only about 10% of Americans buying long term care insurance the rest will spend their estates on paying for care and many will end up on welfare healthcare (Medicaid) after spending all their money.

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