Calculate Your Estimated Cost of Long-Term Care in Retirement

Troy Sharpe: Long-term care is one of the primary concerns when it comes to retirement planning for many people in this country, tens of millions. Today, I want to show you how to calculate your estimated cost of care for long-term care in this country, based on the state where you live.

Troy Sharpe: Hi, I’m Troy Sharpe, CEO of Oak Harvest Financial Group, a certified financial planner professional, host of The Retirement Income Show, and also a certified tax specialist. If you guys have followed me for any period of time, either on the radio show or possibly this YouTube channel since we started it, you’ve probably heard me, at some point talk about my grandparents. My grandparents, who raised me, are one of the primary reasons I do what I do today.

The short version of it is that my grandfather, upon retirement, sold his home and business, and within five weeks, he suffered two aortic aneurysms. He had a large palpitation here and a smaller one underneath it. I was in the doctor’s office with him up in Murphy, North Carolina. He took his shirt off, and my jaw almost dropped. The doctor looked at my grandfather and she said, “Larry, you have 48 hours to live. We’re going to airlift you from Murphy, North Carolina to Chattanooga, Tennessee. Troy, go tell your grandmother what’s going on. Got to undergo a 9-hour surgery, and the odds of survival are about 50%.

The surgery was partially a success. He suffered hypoxia, which is a lack of oxygen to the brain, suffered symptoms similar to a stroke victim, was in the hospital for several weeks in ICU. We went to two different nursing homes over about a six or eight-month period, $10,000 a month for one. We got kicked out because, every day, I’d show up, and I would complain that he wasn’t clean. They said, “Troy, we don’t want you here anymore. You’re more of a pain than it’s worth.” The second one was just horrendous at $8,000 a month.

This was almost 20 years ago. We did home healthcare.

After the nursing homes, we brought him home. Grandma said, “Troy, if he’s going to get better, it’s because we’re going to take care of him.” We had two nurses in 12-hour shifts, 24 hours a day, be there to help take care of my grandfather because that was the type of medical care that he needed. That cost my grandmother, in Murphy, North Carolina, very small town, southwestern border next to Tennessee, $40,000 per month. That is not the average cost of long-term care. My grandfather ended up living for a couple of years, and then he passed away from a massive heart attack.

It’s very near and dear to my heart, and this is why part of our process, we talk to every single client. It’s not just about the investments, it’s about generating income, paying less tax, it’s about having a healthcare plan, a long-term care strategy, having those discussions, and then the estate side of things. How do we bring this all together so that money stays in your family and goes to the people that you care most about? That’s what a successful retirement plan is about.

I want to introduce you to this calculator and also introduce you to the long-term care series that we’re going to be kicking off. We just completed the annuity series where we talked about safety of principle, the opportunity for reasonable growth, lifetime income, et cetera. I encourage you to check that out. Now we’re going to transition into a series about long-term care planning. When we look at life insurance, we look at long-term care insurance, we look at fixed annuities, these are all tools that are designed to protect our standard of living, our quality of life. They’re tools that, if used appropriately, can bring more peace of mind and security to your retirement.

This is from Genworth. If you simply Google Genworth cost of care calculator, you’ll be able to find this. This page should pop up. Here, you’d enter your city, state, or ZIP. We’re in Texas, so click on Texas, down here in Houston. I was kind of hoping this would populate over here, but I guess not, so I’ll type in Houston. Monthly. This is pretty cool here. We’re in 2022 now, but we have a timeline where, once I look at the initial data here, I can come up and slide this timeline and look at the estimated cost of future care based on inflation.

Inflation is rampant in the long-term care arena. It’s one of the big, big issues and challenges that we have from a planning standpoint for those of you who are really concerned about having something set aside to make sure you can cover the cost of care for you or your spouse later. For a private room, the monthly cost, currently, in Houston, Texas right now, is about $7,756 per month, semi-private room, $5,200 per month, assisted living facility, the median cost, $4,200, adult daycare, $1,000, and you have the home health aide.

These are all median monthly costs, but trust me, if you want to spend a lot more today, you can, and you do have other options that are less expensive. From my personal experience, the– I don’t want to be derogatory here, but the quality of care in a lot of these places isn’t the best, from my own experience, not only personally but also working with clients. I’m a big fan of strategies that give us these home healthcare benefits. If we need this care, whether it’s Alzheimer’s or dementia, or we’re physically debilitated or incapacitated, that we have the funds and those funds are structured properly so that we can be paid at home for home healthcare.

Maybe if a child or a grandchild that may need to take care of you. As I did my grandparents, I didn’t work for well over a year, got into some financial trouble, but my grandparents didn’t have a policy in place. I just had to bite the bullet there. When we talk about planning for long term care, we talk about these things as part of a comprehensive successful retirement plan. These are the discussions that we need to have. In this long term care video series, we’re going to introduce you to the concepts, the tools that are available to help combat not just inflation and the rising cost of care, but what you need to know to make sure you have the right policy and right structure to accomplish the things that are most important to you.

Now, if you’re concerned about the cost of care in 20 or 30 years, we just slide this calculator up. I’ll go out to 30 years here. Now, we have the projected future cost of care because of inflation and inflation in the long term care arena is something that is, a huge challenge from a planning standpoint. We have to be cognizant of the increased inflation in this particular sector of the economy if we’re going to do proper planning. This is why also when we start talking about, do you have enough? How much will be left? If something happens to you, will your spouse be okay? These are the big questions that we focus on from a planning perspective. If you tell us that long term care or medical care later in life is important to you, we don’t just want to see all the assets spend down to zero whenever you pass away and you bounce that last check.

We want to make sure that we have a plan in place, that there’s a certain amount of money for you left either you or your spouse dedicated to taking care of this need. When we look at 30 years from now, here in Houston Texas, the median monthly cost for a private room jumps up to 18,826 per month. The 2051 cost for a semi-private room, $12,000 per month. You can see the rest of the numbers here. If you just want to hit pause on your screen, but I encourage you to go to the website. Just simply Google the Genworth Cost of Care Calculator, type in your city, your state, wherever you’re at and start to play around with some of these numbers.

If this is important to you, it’s something that we need to plan for. If you haven’t subscribed to the channel, you’re going to want to subscribe and follow along with this series. There’s no cost to do that. If you have questions or comments, or maybe you can share the long term care experience that you’ve had with your family, maybe taking care of someone or whatever happened in a nursing home or whatever experiences you’ve had. We want to increase awareness. We want to get more people thinking ahead so we can be proactive in planning for these challenges. Of course, if you have a friend or a family member, make sure to share this video, it’s extremely important as well as this entire series.