Thomas Ramey Watson

The Biggest Risk to Your Golden Years — It’s Not What You Expect

The biggest risk to your nest egg is a long-term care event.

With the average cost of long-term care in an assisted living facility at $3300 per month, a $100,000 nest egg could be wiped out in two-and-a-half years. A private room in a nursing home at an average daily rate of $222 will decimate that $100,000 balance in just 15 months. Still worse, the cost of long-term care has increased nearly 6% annually for the past five years.

Advances in medicine allow us to live longer, but have increased our need for care when we’re old and worn out. And if acute diseases like heart failure don’t do us in, the chronic ones like Alzheimer’s and cancer eventually do. In the process, they’ll extend the number of months — maybe years — that we’ll likely need long-term care.

The four options we have when facing a long-term care event include spending down our assets, relying on family, going on Medicaid (not to be confused with Medicare), and buying long-term care insurance. Long-term care insurance policyholders typically cite “not wanting to be a burden on family” as the main reason for purchase.

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