Last week, Revanche from A Gaishan Life asked a question on a subject that I’d rather not think about: long-term care.
“I might have missed this but I’m wondering what the backup plan is for those folks who are relying on keeping expenses low in retirement should their expenses rise due to factors beyond their control?
My primary example here is always health because I supported my mom through ten years of declining health and dementia. I kept my personal expenses bone cheap to afford it but her expenses rose into the five figures, at times, and that would have been incredibly hard to keep up with if I didn’t have the option (and energy!) to work nearly endless hours of overtime. One of the worst thoughts in the world after she died suddenly was realizing that for the first time, I could afford some version of a life.
If we’re lucky, we’ll live long and cheap, and die quickly, but most people I know at the end of their lives require some form of long-term care and not all are lucky enough to have family who care enough and can afford to provide it for them.”
That is a tough question, but most of us will need to deal with long-term care at some point. Early retirees are usually young and healthy so we think we can keep the same budget. However, LTC is very expensive in the United States. A frugal budget probably can’t cover the cost of LTC.
Long-term care (LTC) is a variety of services which help meet both the medical and non-medical needs of people with a chronic illness or disability who cannot care for themselves for long periods (via Wikipedia.)
Let’s look at parents
I’m 42 and I won’t have to deal with long-term care for myself for a long time. However, my parents are getting older and they will need my help. My family doesn’t have a history of needing long-term care, but everyone is living longer now so that might change. Mrs. RB40’s parents are also getting older and may need help at some point. Everyone is divorced so they’re all on their own.
- My dad is 71 and lives in Thailand. His parents passed away suddenly when he was just 5 years old. We don’t really know what the problem was. One of his brothers had a stroke 7 years ago and he lives at home with in-home care. All his other relatives who passed away did so without needing long-term care.
- My mom is 67 and she lives in the US. Her dad passed away from a massive stroke when he was 60. Her mom passed away from cancer and brain tumor complications when she was 82.
Luckily, we don’t have a family history with dementia, Alzheimer’s disease, or Parkinson’s disease. When I die, I want to go quickly like my grandfather who died peacefully in his sleep. Not screaming like the passenger in the backseat. An old joke to lighten the mood a bit. This subject is such a downer.
Long-term care options
Let’s look at some options on how to pay for long term health care.
Pay for it yourself
Most of us will have to pay for long-term care at some point. Long-term care is very expensive, though. The Genworth 2015 Cost of Care Survey showed the following for California. CA is actually cheaper than Oregon for some reason.
- Home Health Care: $52,624 per year for home health aide.
- Assisted Living Facility: $45,000 per year.
- Nursing Home Care: $89,396 per year for semi-private room and $104,025 for private room.
This will quickly deplete anyone’s retirement fund. Let’s look at some other options.
The next option for US citizens and residents is Medicaid. Medicaid is a social safety net meant for people with limited resources and the elderly. I’m not an expert and the rules here are pretty complicated. From what I understand, your income must be below a certain threshold and you have to demonstrate need, i.e. not having much liquid assets. Here is Revanche’s input.
“You can get some kind of minimal care, but it can amount to nearly nothing, in some states so it would be good to keep close tabs on it. My mom was on Medicaid after years of applications and being sick, she never would have survived to have her application approved if I didn’t take over providing for her, and they kept reducing benefits/coverage. Sadly, the Medicaid provided care was also incredibly poor quality.”
It sounds like the quality and availability of care vary widely from state to state. My mom would be a good candidate for this program because she has very little income and not many assets. If you are considering Medicaid and have some savings, you should contact an elder law attorney who specializes in Medicaid planning. They could help you keep some of your assets and clarify the law.
Note: Medicare, the program most of us qualify for, does not pay for long-term care.
Care in the home provided by a spouse or a child is the most common form of long-term care in the US. About 73% of all LTC is provided at home by unpaid caregivers. This would be the first choice for my mom. I’m mostly retired and I will be available to provide LTC for her when she needs it. In some cases, it won’t be possible to provide care, though. Dementia for example starts off small and turns into a huge problem as the disease progresses. As I understand, Medicaid can help defer some costs here if you need to hire some aides.
This option won’t be possible for my dad because he refuses to move to the US. I could go to Thailand for a few months, but I can’t leave my family here in the US for much longer than that.
Relocate to a cheaper location
Young retirees can move to a more affordable country to reduce their cost of living. The same concept could be applied to long-term care. What about moving into a nursing home in Mexico or Thailand? This is a real possibility for my dad because he already lives in Thailand. The nursing home business is pretty new in Mexico and Thailand. The family usually takes care of their elderly at home. In the past, families had many children who could all help shoulder the burden. Now, families have fewer kids so nursing homes are becoming options more and more.
I researched a bit on the internet and found a couple of places in Thailand.
- Namthip Nursing Home in Pattaya – This one seems like a typical nursing home that can accommodate foreigners.
- Care Resort Chiang Mai – This one looks like a luxurious resort!
The single occupancy cost for both of these facilities is about 50,000 baht per month. That’s less than $1,500 per month at the current exchange rate. These prices include all meals, maid service, nursing and care, and utilities. Their care staff are either fully qualified nurses with a degree in nursing or carers who have completed an assistant nurse training. The dementia unit at the Care Resort CM starts at 80,000 baht.
This might be a good option if you have a modest budget and don’t mind the long distance. $1,500 per month isn’t bad at all. That’s less than our current monthly cost of living. Of course, you would need to thoroughly check out the facility and staff. The website looks nice, but I need to see it in person. I’ll put this on my to-do list when we visit Thailand later this year.
Mexico probably would be a better option for most northern Americans.
Long-term care insurance
If your family has a history of needing expensive long-term care, then it’s probably wise to investigate long-term care insurance. The cost varies widely with age, health, and coverage. It looks like the cost for a single 55 year old person is about $2,000 per year.
Well, that’s all I got on this subject. I’m sure we will go through a few of these as our parents get older. We will apply the learning toward our own long-term care planning. We only have one kid and he might not be able to help that much so we probably have to budget for long-term care.
Are you dealing with long-term care? What the plan for yourself and your parents? Let me know if you have another option to add.
Final inappropriate joke
One evening, a family brings their frail, elderly mother to a nursing home and leaves her, hoping she will be well cared for.
The next morning, the nurses bathe her, feed her a tasty breakfast, and set her in a chair at a window overlooking a lovely flower garden. She seems okay but after a while she slowly starts to lean over sideways in her chair. Two attentive nurses immediately rush up to catch her and straighten her up. Again, she seems okay but after a while she starts to tilt to the other side. The nurses rush back and once more bring her back upright. This goes on all morning.
Later, the family arrives to see how the old woman is adjusting to her new home. ”
So Ma, how is it here? Are they treating you all right?” they ask.
“It’s pretty nice,” she replies. “Except they won’t let you fart.”
Image by ulrichkarljoho
Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
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