Be prepared to financially manage long-term care in retirement

Retirement is a complicated transition, which is why it pays to create a financial plan on your own or with professional help to guide late-life decisions.

Critical to crafting a blueprint are guideposts on meeting the potential costs of long-term care and support services, or LTSS.

“Requiring LTSS might be the most significant risk to retirement income adequacy for older Americans,” noted a report from the Morningstar Center for Retirement & Policy Studies.

The report, “The Overlooked Cost: How Long-Term Services and Supports Impacts Retirement Income Adequacy,” is full of projections. The authors estimated some 43% of baby boomers will need professional care before they die.

The main takeaway: Prepare to manage the risk of needing long-term care.

Long-term care and support services is the catchphrase for the help older adults need to deal with daily activities. That includes balancing a checkbook, cleaning the home and more, depending on the degree of mental and physical frailty. These services don’t come cheap, whether the care is done at home or at assisted living or nursing homes.

Morningstar calculated the median lifetime cost for boomer couples needing care averaged about $177,000. For single men, the median estimate is $127,000. For single women, it’s $174,000 (the higher figure reflects that women live longer on average).

“Three things are true about long-term care, though many Americans don’t want to believe it: You are very likely to need it in old age. It will cost a lot more than you think,” wrote Howard Gleckman, senior fellow at the Urban Institute. “And, no, Medicare won’t pay for it.”

When it comes to funding, most people rely on a mix of household savings and family support. In a recent survey, online lending marketplace Lending Tree found the most common expenses for adults who provide financial support to aging parents. They include groceries (69%), personal expenses (49%), housing (44%), utilities (43%) and medical costs (42%).

The reliance on family and other close-knit circles highlights the need to engage future caregivers in conversations about expectations and willingness to participate. Mutual understanding is vital to building a robust retirement plan.