Many people will likely need long-term care. Here’s what it means — and how you can help prepare for it financially.
Long-term care encompasses a variety of services and support designed to help individuals meet their personal care needs due to chronic illness or disability. This type of care provides assistance with essential daily tasks, such as bathing, dressing, managing medications, transferring, and preparing meals. These tasks are commonly referred to as Activities of Daily Living (ADLs).
Planning for long-term care is a critical issue, as nearly 70% of today’s 65-year-olds will require long-term care services and support at some point in their later years. Women typically need care longer, averaging 3.7 years compared to 2.2 years for men.1 “Understanding the vast differences among care options can help individuals make informed decisions and avoid unnecessary confusion,” says Alexis Abramson, PhD, Senior Lead Business Growth Strategy Consultant at Wells Fargo Advice and Planning, Wells Fargo Bank N.A.
There are five considerations everyone should keep in mind as they develop a long-term care plan.
Understand the levels of care and their costs
Aging in place involves receiving services in your home, such as assistance from visiting nurses, home health care workers, family, and friends. This option allows you to remain in a familiar environment surrounded by your personal belongings, offering a sense of independence while maintaining social connections with friends, family, and the community. It is often the most affordable choice for evolving care needs.
Continuing care retirement communities (CCRCs) provide a range of facilities with different levels of care, enabling you to transition seamlessly as your needs change. You begin in a facility that matches your initial care requirements and move to higher levels of care when necessary, eliminating the need to seek a new care facility each time your situation evolves. This continuity can provide peace of mind and stability.
Assisted living facilities offer residences with staff available to assist with daily needs, such as bathing, dressing, and managing medications. This option can provide additional security and reassurance, knowing help is readily available in case of a fall or a health event. While most assisted living facilities do provide 24-hour supervision and staff availability, they typically don’t offer the same level of intensive, around-the-clock medical care as a skilled nursing facility; meaning they may not always have licensed nurses on duty, and the level of care provided during the night may be less than during the day.
Skilled nursing facilities are often residential facilities, such as nursing homes, that provide on-site medical services. These facilities typically offer short-term rehabilitation after hospital stays as well as 24-hour nursing care for residents requiring extensive assistance and supervision.
There are also stand-alone memory care facilities designed for residents with cognitive challenges, such as Alzheimer’s disease. These facilities offer the highest level of supervision and care, reflecting their increased costs. “As you would expect,” Abramson notes, “the associated costs of care increase with the complexity and intensity of the services provided.”
Start planning early
It’s crucial to solidify your plan well before the need for long-term care arises. Proactive planning helps ensure that you’re prepared to cover the costs of care and can avoid the stress of making decisions during a crisis.
- Communicate your wishes
Discuss your long-term care preferences with loved ones to help make sure your wishes are understood and respected. While you might assume that your adult children will provide care and support, it’s essential to have open and direct conversations to confirm their willingness and capacity to help. Collaborate with your family to create an actionable plan that addresses your needs. - Evaluate how to pay for care
Long-term care expenses can be significant, and government programs like Medicare and Medicaid have limitations. Consider incorporating multiple approaches to fund your care, such as liquidating some of your assets, paying out of pocket, relying on family contributions, or purchasing long-term care insurance. Abramson emphasizes the importance of including inflation protection if you decide to buy a long-term care insurance policy: “This feature helps ensure the policy retains its value and provides adequate coverage when needed.”
It’s also advisable to consult with legal and financial advisors to explore all available options and develop a comprehensive plan.
Understanding the various levels of care, communicating your preferences, and preparing financially can help you approach long-term care planning with confidence and clarity.
1. “How Much Care Will You Need?” U.S. Department of Health and Human Services, Feb. 2020.
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