​Long-term care is a very real threat for many retirees. Driven largely by the rise of Alzheimer’s and other cognitive conditions, long-term care is a likely outcome for most seniors. The U.S. Department of Health and Human Services estimates that 70 percent of today’s 65-year-olds will need long-term care at some point in their lives.1
 
The threat of long-term care may loom even larger for women, though. Much of the risk stems from the fact that women are likely to live longer in retirement than men. The Society of Actuaries estimates that a 65-year-old woman has a 50 percent chance of living to age 90 and a 25 percent chance of living to 96. A 65-year-old man, on the other hand, has the same odds of living to 87 and 92, respectively.2
 
A longer life span is always a good thing. However, it can bring certain challenges. One is that a longer life span means more years in retirement. Those years may need to be funded with distributions from your savings, which means you’ll need to make your savings last over a longer period of time. You could face financial difficulties in the later years.

A longer life span could also mean you’ll face more serious health challenges. As you age, you may be more likely to suffer cognitive issues, cancer, heart disease or a wide range of other issues.
 
Longevity can also influence your long-term care needs. Below are a few long-term care challenges that are specific to women. If you don’t have a long-term care strategy, now may be the time to develop one. A financial professional can help you examine your risk and create a plan.

Women are more likely to live alone in retirement.
 
It naturally follows that since most women outlive men, women are also more likely than men to live alone in retirement. Recent studies by Pew Research show that 32 percent of all women over the age of 65 live alone. While that’s down from a high of 38 percent, it’s still much higher than the 18 percent of men in that age group who live alone.3
 
Living alone can have a big impact on long-term care. Married couples are able to rely on each other for the early stages of care. That can delay the need to hire an in-home aide or even move into a facility.

A single or widowed retiree may not have that option. If you need help with mobility, meal preparation or even household chores, you may need to hire someone to do it. If you get to the point where you need assistance regularly, you may have no choice but to consider a facility.

Women need care longer than men.
 
Another natural result of longevity is the need for more care. The U.S. Department of Health and Human Services estimates that the average woman will need long-term care for 3.7 years, while the average man will need care for 2.2 years.1
 
According to a study by Genworth, the average monthly cost in 2018 for a full-time home health aide or a room in an assisted living facility was $4,000.4 That means the extra 1.5 years on average spent in long-term care could cost a woman an additional $72,000 over her male counterpart’s costs.
 
It’s important to note that Medicare often doesn’t cover this care. It may cover portions that are related to skilled nursing care and medical treatment, but even that coverage is usually partial and temporary. You may want to consider a long-term care insurance policy to fund the portion of care that isn’t covered by Medicare.

Women are more likely to care for others.
 
Even if you don’t need care in retirement, you may be called on to care for others. According to the Family Caregiver Alliance, 66 percent of all caregivers are female, and these caregivers provide 50 percent more care in terms of hours than their male counterparts.5
 
This care can have an impact on your finances and your health. Women are more likely than men to work fewer hours, pass up a promotion and even retire early because of caregiving. A female caregiver is also more likely to suffer from heart disease and cognitive issues and to skip regular wellness checkups and exams.5
 
It’s important not only for you to have a long-term care strategy, but also for your spouse to have one. If he doesn’t, you may become his long-term care provider by default. That could have a sizable impact on your retirement and your future health.

Ready to plan your long-term care strategy? Let’s talk about it. Contact us today at Senior Care Alliance. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
 
1https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
2https://www.fidelity.com/viewpoints/retirement/longevity
3http://www.pewsocialtrends.org/2016/02/18/smaller-share-of-women-ages-65-and-older-are-living-alone/
4https://www.genworth.com/aging-and-you/finances/cost-of-care.html
5https://www.caregiver.org/women-and-caregiving-facts-and-figures
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18148 - 2018/10/17

​

​Social Security recently announced good news for retirees. In 2019, benefits will increase 2.8 percent. That’s the largest cost-of-living adjustment (COLA) in more than a decade. Last year benefits increased only 2 percent, and they didn’t increase at all in 2010, 2011 or 2016.1
 
Cost-of-living adjustments are meant to help retirees cope with inflation. Inflation is a natural part of the economy. As the economy expands, costs for labor, materials and other resources tend to increase. That drives up prices for a wide range of goods and services. While inflation isn’t necessarily a bad thing, it can be dangerous for seniors on fixed incomes.
 
That’s where COLA comes in. Social Security offers COLAs to help seniors keep up with inflation and maintain their standard of living. The cost-of-living adjustments are based on a broad version of the consumer price index (CPI). However, there’s been debate about whether Social Security’s formula is actually appropriate.

Why COLA May Not Be Accurate for Retirees
 
There are a couple of reasons why you shouldn’t count on a COLA to help you keep up with inflation. First is the way in which COLA is calculated. Social Security uses the CPI-W as an inflation index. The CPI-W is based on expenses for urban workers.
 
Retirees have different expenses than workers, though. Many retirees spend much more of their income on health care than the average worker does. They also may face increased costs for housing, especially if they’re staying in an assisted living facility. The CPI-W doesn’t account for this increased spending on health care and housing, so the inflation rate may not be appropriate for retirees.
 
Also, Social Security probably doesn’t cover all your retirement spending. After next year’s increase, the average Social Security benefit will be $1,461 per month.2 While that’s a helpful amount, it’s probably not enough to fund your entire retirement. That means you’ll also need to increase your other income streams to fully keep up with inflation.

Tips to Plan for Inflation
 
There are a number of strategies you can implement to increase your income and keep pace with inflation. One is to stick with a long-term plan and remember that you’ll need growth to fund a long retirement. Work with your financial professional to develop a strategy that minimizes risk but also allows for growth to increase your income.
 
You could also use annuities, which are effective tools for creating guaranteed* lifetime income streams. Some offer inflation protection so your income increases each year. Others, like variable annuities, allow you to grow your assets and lock in gains, and then take guaranteed* income for life.
 
A long-term care insurance policy with an inflation rider could also be helpful. The costs of long-term care are rising every year. An insurance policy with an inflation rider will increase your benefit so it keeps pace with rising costs. When you need long-term care, the insurer will pay some or all of the expense.

Ready to develop your retirement inflation strategy? Let’s talk about it. Contact us at Senior Care Alliance today. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
 
1https://www.ssa.gov/cola/
2https://www.fool.com/retirement/2018/10/16/heres-the-average-social-security-benefit-for-2019.aspx
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18149 - 2018/10/17