Special to the Financial Independence Hub
Man sacrifices his health in order to make money. Then he sacrifices his money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived. – James J. Lachard
You have worked your butt off for many years saving, investing, and doing mostly the right things. You’ve accumulated a substantial retirement account and are ready to retire. You know both your yearly spending average and your daily spending average, and are well within your Safe Withdrawal Rate.
You retire, and life is better than you ever expected. As the years pass your net worth continues to grow, and you are feeling confident and have relaxed into your lifestyle.
Then you get sick.
Health insurance covers most of the expenses, and you move on. Then something more serious happens, and costs are exploding. You need in-home care and services that are not covered by your policy. You are starting to strain your nest egg, and the financial security that you have worked your entire life for is slipping away.
Long-term care insurance?
According to a recent MarketWatch story, a 55-year-old couple buying one common long-term care policy today can expect to spend more than $5,000 a year on premiums. Those with certain pre-existing conditions are not insurable or may have a waiting period before the policy kicks in, so it is recommended by The American Association for Long Term Health Insurance to apply for coverage earlier in your life rather than later. These changes in your health as you age can make it harder or even impossible for you to health qualify for long-term care insurance. This adds years to your payments.
When you’re healthy, an LTC plan simply seems to drain your assets at a slow drip. And what if you never use it? Then the money is gone, never to be recovered. Not only that, but the care plan changes over time, so certain things that were covered when you first bought the policy may not be covered when you actually need the insurance.
We, too, are wrestling with this issue and looking for answers to the “what ifs.” This is not a fun topic, and none of us wants to imagine being dependent on LTC insurance, but the reality is that at some point we will all need intensive care.
Time for reflection
Do you really want to spend your hard-earned money on high-priced health-related expenses? It’s a worrisome idea for all of us who are aging.
Fortunately, we have experienced living outside of the U.S. and have enjoyed the reduced costs of living, which include affordable and quality healthcare. Friends we made in these foreign countries in the early years of our retirement have since passed on, shedding some light on a possible care plan for our future.
From our experience and observation, our first choices for affordable long term care would be to settle down in Chiang Mai, Thailand; Chapala, Mexico; or the Antigua/Panajachel region of Guatemala. In any of these places, you could hire a daily helper for an affordable price, and doctors still make house calls.
This is about as good as it gets in a tough situation other than depleting our assets and living out our final time in a nursing home in the States. We would prefer to gift our money to organizations and projects of our choice, not spend all of our hard earned cash out of need to cover our final days.
Aging in Place: Sample numbers to consider
Recently, we spoke to Dr. Luis DePena in Panajachel, Guatemala, who was able to give us some working figures for medicine and in-home care for this geographical area. It was his opinion that, unless one needed dialysis, which could not be done here in Pana and is very expensive, pain medication and other various medications would cost approximately $660 per month per couple, or about $7,920 a year.
According to the Guatemalan government, the minimum wage for a resident of Guatemala who cooks, cleans, and provides daily care is about $9 a day, or $3,285 per year. Then there are house calls by doctors. At today’s price of $39 per visit, one house call per week would cost you $2,028 per year.
Altogether, your in-home care might cost you about $13,200 per year in Guatemala. Pricing in Thailand or Mexico is very similar.
Of course, you will need to cover room and board for your help — and, most likely, for a child that they would bring along. And then there are costs like rent, food, and other medical supplies like Depends, dressings, and salves as well. But the estimated total expenditure for pain and other meds, in-home care and doctor home visits would be just over $13,000 per year. Again, this is per couple. If you budget $15,000 per year for this category of health expenses, that would give you some slack in case you might want it.
Compare that to what you might be able to find in the city or state in which you currently live. According to the Genworth 2015 Cost of Care Survey, the median cost of a private room in a nursing home in the States is over $91,000 annually, while the median annual cost of a home health aide is $45,760.
The American Association for Long-Term Care Insurance says the average stay in a nursing home is 2.6 years for women and 2.3 years for men. Based on the above figures, you are looking at hundreds of thousands of dollars for a couple to spend their last few years in a nursing home, along with a considerable amount of money for in-home care beforehand.
Do you have enough savings allotted for this future expense?
Opening up the options
We have written about continuous care before and have listed the prices you would pay in Mexico. Instead of $3,000 to $7,000 per month for assisted living in the States, a resident of Mexico can find assisted living care for about $2,000 per month — and that includes rent, meals, laundry, WiFi, cable TV, transport, and, oftentimes, a fitness room, a swimming pool, and an on-site nurse. As Boomers age, we see these homecare opportunities overseas becoming even better as foreign lands realize the benefits for their citizens to take careers in health service and provide quality care in resort living facilities to an aging population.
Perhaps it’s time for you to open up to your options. We realize not everyone is inclined to move overseas. Then again, not everyone has, or wants to spend, the amount of money required for long-term care in the U.S. And some do not have family they can rely on to care for them as they age.
Even though it’s a difficult subject to broach, knowing you have affordable alternatives can bring you peace of mind.
About the Authors
Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance and world travel. With the wealth of information they share on their popular website RetireEarlyLifestyle.com, they have been helping people achieve their own retirement dreams since 1991. They wrote the popular books, The Adventurer’s Guide to Early Retirement and Your Retirement Dream IS Possible.