This week, I’m sharing with you several types of stress tests that you should run on your retirement portfolio. 

Today, I’m talking about stress testing your retirement with a long-term care health event. According to a 2017 study by AARP, if you’re 65 or older, there is a 52% chance that you will need some type of long-term care in your lifetime. 52%. Toss a coin and it could go either way. So the odds are pretty high. 

The median annual cost for long-term care ranges from $18,000 for adult day care to $97,000 for a private room in a nursing home. 

If you require long-term care for an extended period or if you develop dementia or Altzheimer’s, the costs skyrocket. The estimated lifetime cost of care for someone with dementia is $341,840.

And 15% of us will spend more than $250,000 on long-term care in our lifetime. 

That’s a big drain on your portfolio in retirement, so ignoring the impact and likelihood that you’ll need long-term care at some point, perhaps at considerable expense, could completely derail your retirement, and if you don’t recover, the costs associated with extended long-term care expenses can devastate your surviving spouse. 

The problem with long-term care is that most people simply can’t afford to pay the premiums that come with purchasing a long-term care insurance policy. But if you’re in the sweet spot of having enough income to afford a policy, yet you aren’t so wealthy that a long-term care health event costing $250,000 or more would still devastate your retirement portfolio, then looking into buying long-term care insurance policy would be a smart move. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

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