One of the biggest mistakes people make in retirement planning is figuring out how much money you will need in your old age to live comfortably, and still be able to pass on gifts to loved ones and your favorite charities. People are living longer and longer and some financial analysts are having to throw traditional models right out the window.  The New York Times recently posted an article entitled, “Tallying the Cost of Growing Older,†which explored many of the pitfalls seniors fall into as they enter retirement. “Becoming frail and needing help with basic personal care is probably the greatest financial risk people face at older ages,†Richard Johnson, the economist who directs the Program on Retirement Policy at the Urban Institute,†told the NYT. A 2019 study he undertook for the federal Department of Health and Human Services found that over their lifetimes, about 70% of older adults will need help from caregivers either in their own home or in long-term care facilities. Dr. Alicia Munnell, an economist and director of the Center for Retirement Research at Boston College found that only about half of the U.S. population will be able to maintain their standard of living in retirement. Her team analyzed senior lifetime care needs as low, medium or high intensity, based on how many activities of daily living they need assistance with. Their analysis found that only 17% of 65-year-olds will need no long-term care, while almost one-quarter will develop severe needs, requiring many hours of help for more than three years. Most people are somewhere in-between. Their research also found that only 36% of people in their late 60’s could not even cover a year of in-home care, and that was at 2018 rates of $22 an hour—this has gone up significantly with the current labor shortage. We are a big proponent of long-term-care insurance. It’s very expensive but worth it in the long run if you run into health problems. Few people realize how expensive it can be to remain independent in your own home with the help of paid caregivers.
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