How Much Money do I Need for Medical Expenses in my Retirement?

Got an Extra Half-Million Dollars? Part 2 - Do You Have a Quarter Million Dollars for Your Long-Term Care?

This article is the second in a series looking at the cost of medical care, post retirement.  In the first article, we looked at the cost of routine medical care projected to cost over $250,000.00 per person; in this article, we will look at the additional cost of long-term care, which is not included in the calculation for that first article.

At the present time in Wisconsin, the average cost of nursing home care is nearly $9,000.00 per month.  That’s an average.  There are facilities that are charging considerably more than that amount.  Even at $9,000.00 per month, that totals $108,000.00 per year.

The statistics vary, depending on the source, but according to Morningstar, the average length of stay for a nursing home resident was nearly 2 ½ years.  According to that same resource, for those people in a nursing home, only about 49% of their costs were covered by Medicaid, and only about 7.5% of costs were covered by private insurance.  In other words, the difference, or more than 40%, is paid from their own funds.

According to a study completed in 2016, the average lifetime cost for long term care was already at $172,000.00 per person.  Thus, for a married couple, the cost would be double that, or $344,000.00.  The same study projected that by the year 2047, those costs would double again, to $344,000.00 for a single person and $688,000.00 for a married couple. 

Many people have the mistaken notion that Medicare will pay for most of their long-term care.  The reality is that Medicare only pays a very limited amount towards long term care, and the bulk of the cost will have to be paid either by ourselves personally, or long term care insurance, or Medicaid, for those who qualify.

Even so, Medicare and Medicaid face looming burdens.  Population studies show that requiring long term care, and fewer and fewer people paying into the Medicare and Medicaid systems. 

Some people think that they can rely on family members to provide these services, only to learn that family members either cannot, or will not provide those services.  Other people think that it would be cheaper to stay at home and hire caregivers; the reality is that in-home care can often be much more expensive than nursing home care.  Assisted living facilities are generally less expensive than nursing homes but are already at about half the cost of nursing homes, and a person generally needs to require only limited assistance, in order to stay at an assisted living facility.