By Larry Lane for www.InvestorZoo.com

Thanks to new medical breakthroughs and new drugs, we as a population are living longer and more active lives. In 1900, the life expectancy of the average American was 47. Today, there are more survivors of cancers and diseases that were previously considered incurable. Depending on when you were born, you can expect to live to 76 to 91 years old.

However, all this technology comes with a dual edged sword. The longer you live, the longer you’re going to have to stretch out your retirement dollars. According to Genworth Financial, the cost of long term care can vary from $32,000 per year in Louisiana to $46,000 in California. Remember this is in 2009 dollars. Unless you’ve had your head in the sand for the last 20 years, you know about the skyrocketing costs of healthcare. The cost of long term care needs to be factored in as one of your retirement expenses. In general, the pundits will say you need 75-80% of your current expenses in retirement. Long term care insurance may be the wild card in your retirement plans. If you are 5, 10 or 20 years out before retirement, no one knows what the cost will be for long term care insurance.

Here are just a few statistics about where we’ve come as a country and how long we can expect to live:

The fastest growing age group in the country

Those ages 85 and over- Federal Interagency Forum on Aging-Related Statistics. Older Americans 2004: Key indicators of well-being, Federal Interagency Forum on Aging-Related Statistics. Washington, DC: U.S. Government Printing Office, 2004.

70% of couples can expect at least one partner to need nursing home facilities after age 65

Of the older population with long-term care needs, about 30% (1.5 million persons) have substantial long-term care needs (three or more ADL limitations). Of these, about 25% are 85 and older and 70% report they are in fair to poor health. The Henry J. Kaiser Foundation. Long-term Care: Medicaid’s role and challenges [Publication #2172]. Washington, DC: Author, 1999.

In 2004, the average daily rate for a private room in a skilled nursing facility was $192 for a private room or $70,080 annually, and $169 or $61,685 annually for a semi-private room. The hourly rate for a home health aide was $18.12.

In 2000, annual cost estimates were $13,000 for adult day care and $25,300 for assisted living

The average length of stay for long-term care nursing home residents is 2.43 years. Source: CDC, National Nursing Homes Survey

We’ve now established you need long term care insurance. LTC insurance is inexpensive if purchased at a young age. As with most forms of insurance, it is cheaper when you don’t need it .Think of it this way, you don’t have tornado insurance on your house. That day, you hear the weatherman call for a 100% chance of a category 5 tornado. In a panic, you call your insurance agent who quotes you an astronomical price. If you would have purchased tornado insurance last year, your premiums would have been much lower. The same goes with long term care insurance. If you purchase it when you don’t need it, you’ll save money in the long run. A 65 year old will pay more for insurance than who starts to purchase their insurance in their 40s.

Long term care policies are sold by independent insurance companies, usually in conjunction with a life insurance policy. There are no standardized versions of a long term care policy. Benefits differ from company to company. Some offer to pay a fixed dollar amount for each day you receive care. Others only pay a percentage of the cost, or a pre-specified dollar amount to cover the cost of services. There also may be waiting periods before the insurance policy is placed into effect. It pays to shop around and compare. Not all long term care insurance policies and companies are the same.

As always, do you due diligence and most importantly get insured. Not only does it make good financial sense, but it will allow you to sleep soundly at night.

Genworth Financial is a great source for long term care insurance:

http://www.genworth.com/content/etc/medialib/genworth_v2/pdf/ltc_cost_of_care.Par.41652.File.dat/Cost of Care Maps_gnw.pdf

Larry Lane is the editor for www.InvestorZoo.com, a social networking site specializing in personal finance

The article above is information of a general nature and the information provided may not apply to your personal situation. Please consult your financial planner or licensed professional for investment advice.

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