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One Minute Retirement Tip with Ashley

May 16, 2020

This week, I’m sharing with you several types of stress tests that you should run on your retirement portfolio. 

Today, I’m talking about stress testing your retirement with a long-term care health event. According to a 2017 study by AARP, if you’re 65 or older, there is a 52% chance that you will need some type of long-term care in your lifetime. 52%. Toss a coin and it could go either way. So the odds are pretty high. 

The median annual cost for long-term care ranges from $18,000 for adult day care to $97,000 for a private room in a nursing home. 

If you require long-term care for an extended period or if you develop dementia or Altzheimer’s, the costs skyrocket. The estimated lifetime cost of care for someone with dementia is $341,840.

And 15% of us will spend more than $250,000 on long-term care in our lifetime. 

That’s a big drain on your portfolio in retirement, so ignoring the impact and likelihood that you’ll need long-term care at some point, perhaps at considerable expense, could completely derail your retirement, and if you don’t recover, the costs associated with extended long-term care expenses can devastate your surviving spouse. 

The problem with long-term care is that most people simply can’t afford to pay the premiums that come with purchasing a long-term care insurance policy. But if you’re in the sweet spot of having enough income to afford a policy, yet you aren’t so wealthy that a long-term care health event costing $250,000 or more would still devastate your retirement portfolio, then looking into buying long-term care insurance policy would be a smart move. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.


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