Inflation is a force to be reckoned with when it comes to financial planning. It can impact everything from the cost of goods and services to the amount of money you need to save for retirement. In this blog post, we will take a look at how inflation specifically impacts long-term care, and what that means for your long-term financial planning strategy.
As many move closer and closer to the golden age of retirement, financial advisors are receiving a plethora of questions about inflation and how it impacts their financial plans. Will it impact their retirement? Do they have enough?
Inflation certainly has an impact on all of the above, but one thing many don’t account for is the impact or rather the need for preparing for long-term care.
What is Long-Term Care?
According to the National Institute on Aging, “long-term care involves a variety of services designed to meet a person’s health or personal care needs during a short or long period of time. These services help people live as independently and safely as possible when they can no longer perform everyday activities on their own.”
Why Plan For Long-Term Care?
The cost of long-term care can be prohibitive, and it’s important to plan ahead so you’re not caught off guard if you need to access this type of care. Inflation can impact the cost of long-term care, so it’s important to factor that into your financial planning.
Most people don’t like to think about the possibility that they may one day need long-term care. However, the reality is that long-term care is a necessity for many people. According to the National Council on Aging, one in four Americans over the age of 65 will need long-term care at some point in their lives. And the costs of long-term care are not insignificant. The median cost of a private room in a nursing home is $102,000 per year, and the median cost of an assisted living facility is $45,000 per year.
There are a number of reasons why you should plan for long-term care. First, long-term care is expensive. If you don’t plan for it, you could find yourself in a difficult financial situation. Second, long-term care can be emotionally draining. If you don’t have a plan in place, you may end up putting a lot of strain on your family and friends. Finally, long-term care can be stressful. If you don’t plan ahead, you may find yourself feeling overwhelmed by the process. Planning for long-term care may not be pleasant, but it’s an important step to take to ensure your future wellbeing
How Inflation Impacts Long-Term Care
Inflation can have a significant impact on long-term care. The cost of long-term care services is rising at a rate that is outpacing inflation, which means it’s becoming more and more expensive. This is something you need to factor into your financial planning so you can be prepared should you need it at some point during your retirement. Don’t believe it? One study showed that as many as 70% of Americans will need a form of long-term care at some point during their lifetime.
What does this mean for you and your financial plan?
The first step is to factor the cost of long-term care into your overall retirement plan. This will ensure that you have the resources available should you need them. A typical savings account, IRA, or 401(k) may not be enough. Your financial advisor can help you in understanding what assets you have and what can help you bridge the gaps should you need them.
Second, consider long-term care insurance as part of your financial planning strategy. While this type of insurance doesn’t cover medical costs, it can help cover things like nursing homes, skilled nursing facilities, adult day cares, etc.
Planning for retirement is important, but planning for long-term care during inflation can be downright challenging. Work with your financial advisor to make sure you not only have a solid plan in place but to optimize your retirement savings so you’re not caught off guard.
Inflation and Long-Term Care While Planning for Retirement
In conclusion, long-term care and the current inflation rate are important factors to consider when planning for your retirement. While things like long-term care insurance can help to cover the costs of care, it is important to remember that the costs of care are constantly increasing. Additionally, inflation can have a significant impact on your retirement income. Therefore, it is important to choose investments that will offer you protection against inflation. By taking these factors into account, you can ensure that you have a secure and comfortable retirement.