Long-Term Care Basics - Home Care

Long-Term Care Basics - Home Care

Here’s the headline: $119,238. That’s how much a nursing home costs the average resident for an average stay of 14 months. And that’s just the last phase of care. Before entering a nursing home, most seniors previously receive care at home — and potentially in a less intensive assisted living facility. All of these arrangements are part of the long-term care continuum. Americans turning 65 today have a 70% chance of needing some form of long-term care during their lifetime: That’s why you need a basic understanding of how the system works while you still have time to plan and save for your future.

Many Paths, One Destination

Figuring out what your long-term care journey will look like and how much it will cost is guesswork. You may not stay in a nursing home at all. You may or may not have health conditions that require skilled nursing care. Based on your personal medical history, your doctor may offer some advice on conditions you may develop as you age, and the family history of close relatives can also offer some clues.

Long-term care ranges from having a minimally trained helper come in for a few hours of light housekeeping each week to receiving 24/7 custodial care in a dementia/Alzheimer’s unit. Each potential arrangement comes with its own regimen and associated costs.

Where you live has an enormous impact on price as well: The median cost of a private room in a nursing home is almost $362,000 a year in Alaska — more than three times the national median of $102,200 — while in Oklahoma, it drops to $67,000. Here are some options you might have for receiving long-term care at home.

In-Home Caregivers

For most seniors, staying in their own home — or in the home of an adult child or relative — is their first choice. A homemaker is a person who comes in to do light housekeeping and run errands but is not medically trained and remains “hands off” with the client. An assistant who provides some direct care to the patient, like mobility and toileting, is a home health aide. The median national wage for homemakers is $22.50 an hour, whereas it’s $23 an hour for a home health aide.

For those who need professional medical support on a limited basis but are otherwise able to move about, make their own meals and tidy the house, in-home skilled nursing provided by an RN, LPN or other trained healthcare worker is also available at a median national cost of $87 per visit.

Having a live-in helper is popular with those who have space in their home. Costs vary widely depending on where you live, what hours and duties are required, whether the helper needs medical training and whether you hire them through an agency, community program or private agreement.

Community-Based Programs

Especially for a family caring for an older relative, having a safe place he or she can go during the day can be a good option. Adult Day Health Care (ADHC) programs vary by the facility but can include transportation, medical management and meals. The median rate nationally is $75 a day, and some programs offer half-day sessions at a lower cost.

Senior Housing Options

Independent living and senior housing facilities provide additional on-site services for residents, sometimes at an additional cost. Individual apartments are often equipped with grab bars, call buttons and other amenities and safety features geared toward an aging population. They might also offer a visiting nurse service, on-site social activities or transportation to local stores and other destinations.

Many seniors (and younger people with certain conditions) sustain semi-independent living for many years, if not their entire lives. However, once there is a need for greater assistance with medication management and activities of daily living, a residential care program may be needed — these options are discussed in part two.

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In the Long Term, Medicare Falls Short

In the Long Term, Medicare Falls Short

Americans turning 65 now have about a 70% chance of needing long-term care in the future. You might assume that Medicare will pay for all your long-term care needs, but you’d be wrong. Medicare does provide some benefits, but only under very specific conditions.

So What Does Medicare Cover?

Medicare does cover some long-term care if you meet the following criteria:

  • You have had a hospital admission with an inpatient stay of at least three days

  • You are admitted to a Medicare-certified nursing facility within 30 days of that inpatient hospital stay

  • You need skilled care, such as skilled nursing services, physical therapy, or other types of therapy

If you meet all their conditions, Medicare pays a portion of the costs for up to 100 days for each benefit period. After day 100, Medicare typically does not pay anything.

If your doctor prescribes it to help treat an illness or injury, Medicare can also cover physical, occupational or speech therapy as well as durable medical supplies such as walkers, wheelchairs and oxygen — typically, Medicare pays 80% with you responsible for 20%.However, a Medicare supplement plan could pay some or all of that difference.

The assistance is good for 60 days, but your doctor may reauthorize it. If you’re otherwise pretty healthy but need a home care aide to help with meals and take you for a walk, that form of support is typically not covered even though it’s the type of help that seniors commonly benefit from.

The Alternatives

Family Assistance.Many older Americans get through this period with help from friends and family. Unfortunately, this trend creates a period of “sandwich” years for middle-aged people as they juggle helping parents while raising their own children and managing a career. And sadly, some seniors have no family willing or able to help out.

Private Insurance. Others may have invested in long-term care insurance, paying premiums over a number of years in order to receive payments to help with their long-term care. However, the high price tag associated with such policies can make them cost prohibitive for many.

Medicaid. For some, their only resort is Medicaid, the medical assistance program run jointly by the federal government and the states. Rules vary by state, and some states are more generous in who they cover and how much they pay. Check your state’s Medicaid website to find out what the rules are where you live or where you’ll be when you retire.

In many cases, single applicants can have no more than $2,000 in assets to qualify for Medicaid. These typically don’t include your primary residence or one car, but they generally include bank accounts, large insurance policies and the like. There are also certain kinds of trusts that can protect assets that would otherwise disqualify you, but the rules are very specific, and it’s advisable to seek out counsel from an elder law attorney before going down that route.

Be aware that Medicaid also has what’s known as a “look back” period: Any assets you transfer to someone else within a certain number of years (depending on the state) prior to your Medicaid application will create a “penalty period,” a number of months in which you cannot receive Medicaid even if you would otherwise qualify.

The Importance of Planning Ahead

The cost of long-term care can be considerable; it can deplete your hard-earned nest egg and wipe out assets you may have hoped to give to your children. Take the time to have an in-depth discussion with your financial advisor, as early as possible, to sort out what kinds of care you may require, how much it could cost and how you could afford it. Your options will become decidedly more limited once you actually have a medical need. As Ben Franklin reminded us, an ounce of prevention is worth a pound of cure. This is the time to expend the effort to prevent an old-age calamity.

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Why Asset Allocation Isn't a One-Size-Fits-All Proposition in Retirement

Why Asset Allocation Isn't a One-Size-Fits-All Proposition in Retirement

One often-cited guideline for determining asset allocation when planning for retirement is that you should subtract your age from 100 to find the percentage of your investment portfolio that you should keep in stocks. For example, it suggests if you're 40, you should keep 60% of your portfolio in stocks. And if you're 50, you should reduce that ratio to 50% with the remainder in other sources like bonds and cash equivalents.

It's tempting to reach for a solution to deal with something so complex. But one fact is 100% true: You can't apply a one-size-fits-all approach to retirement planning because every retiree's situation is unique. Here are five factors that can influence investment allocations during retirement:

  1. Personal risk tolerance. Losing sleep worrying about your portfolio is no way to spend your golden years, no matter what the numbers might suggest. If risk is keeping you up at night, you may want to consider a more conservative allocation of investments.

  2. Additional sources of retirement income. A hefty pension benefit, sizeable inheritance or significant Social Security benefits may mean you can afford to expose a greater proportion of your investments to equities during retirement.

  3. Insurance costs. If you retire before you're eligible for Medicare, you may have to allocate a greater proportion of your budget to health insurance until that time arrives. If so, you'll want to make sure the funds you have set aside to cover those costs are not subject to the potentially volatile ups and downs of the stock market, lest a poorly timed downturn leaves you coming up short to cover your premiums.

  4. Age-gap couples. Nearly 10% of couples have an age gap of 10 years or more, which can muddy the retirement planning picture considerably depending on whether partners intend to retire at the same time or years apart. Different drawdown strategies, long-term care costs and decisions about when to start receiving Social Security benefits can all impact asset allocation during retirement.

  5. Your retirement dreams. Some retirees are content with living simply, while others have grander plans that involve moving to a more expensive part of the country, dining out at fancy restaurants, traveling the world or even starting a business. Your lifestyle aspirations during retirement will also determine how aggressive your investment allocation might need to be in order to fund those dreams.

These are just five factors that affect allocation decisions during retirement - but there are many others. That's why getting the advice of a qualified financial advisor to help guide you through the complex and highly individualized process of planning for retirement is a prudent course of action. The earlier you start, the greater the chance that your family will be in a better financial position by the time you exit the workforce.

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Retirement Planning: Understanding 3 Primary Asset Classes

Retirement Planning: Understanding 3 Primary Asset Classes

Determining an appropriate mix of investments and matching those choices to your retirement goals is a keystone of successful retirement planning. If your eyes glaze over when someone starts talking about asset classes, diversification and allocation, you're not alone. Here's a quick guide:

What Is an Asset Class?

The three most common asset classes are stocks, bonds and cash. An asset class is a group of investment vehicles that usually behave in the same way - their price and profitability tend to move together in response to market conditions.

Why Do I Need to Know This?

Just as investments in one asset class move together, investments in different classes often move in different directions. Investors use these differences as one strategy to mitigate risk by dividing their investments among several asset classes - because when the value of one asset class goes down, the others may hold their ground or increase, offsetting other losses. This is called diversification.


Equities, or stocks, represent shares of ownership in the company issuing the stock. When profits go up, the stock price usually goes up too. For example, in 2006, the average price of one share of Apple was arount $10. By early 2020, the success of innovative products like the iPhone drove the price as high as $327.20. However, there's also a risk that stock prices will decline. The fall in stock values in March 2020 due to Coronavirus-related closures is a stark example: By the end of the first quarter of 2020, Apple was trading at $254.29 . That hurts if you bought at $327.20, but it's still great if you bought at $10 or $50 or $100, which demonstrates how holding investments over a longer time can help to reduce risk.


A bond is a loan that is usually issued by a government or a corporation. The bond has a maturity date - the date the issuer promises to redeem the bond - and a principal value, which is the amount the bond holder will be paid by the issuer when the bond is redeemed. Investors buy the bond at a price that's lower than the principal value. Their profit is the difference between what they paid for the bond and the principal value. Bonds are generally considered less risky than stocks because even if a company's stock price drops, it still owes bond holders the amount it promised them. Bonds are not without risk, however. Companies in poor financial shape sometimes issue bonds with very high rates of return to entice investors. These "junk" bonds can be very profitable, or they can be worthless if the issuer defaults. Bonds from the U.S. Department of the Treasury are considered among the safest investments because while corporations and local governments have defaulted on their bonds, the federal government never has.


This asset class consists of cash deposits, money market accounts and other "cash equivalents," or investment instruments that can be turned into actual cash quickly. Cash is safe but also not without risk as inflation can eat away at the value of cash assets over time. For bank deposits, the Federal Deposit Insurance Corporation (FDIC) insures your deposits for up to $250,000. Be careful though: While they may sound similar, the money market funds that brokerage firms offer are not guaranteed by the federal government, so they carry some additional risk.

Asset Diversification Over Time

How you distribute your investments between these three different classes is fundamental to sound retirement planning. How much risk are you willing to take? The longer the time until you retire, the more risk you can afford as you'll have more time to recoup any losses.

Talk to your investment advisor about your goals, your risk tolerance and your timeline. Financial advisors generally recommend that, as you get closer to your desired retirement age, you decrease the risk of big losses in the value of your investments by changing the allocation between asset classes in your portfolio. You can "rebalance" your portfolio yourself or buy into an investment fund that has a "target date," meaning the fund automatically invests in less risky assets as that target date approaches.

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1. https://www.macrotrends.net/stocks/charts/AAPL/apple/stock-price-history

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