Goldstone Financial Group is all too aware of how frustratingly expensive healthcare can be for American seniors.
As an investment firm that specializes in creating retirement income strategies that will last for the whole of a senior’s retirement, Goldstone Financial Group has developed a comprehensive understanding of the expenses that retirees can face during their sunset years. Some, including healthcare, are often frustratingly expensive and entirely unexpected.
“A lot of our clients don’t think about their health care costs going up, or about how they will respond if they do,” Anthony Pellegrino, Goldstone Financial Group’s co-founder and principal, shares. “As advisors, it’s our responsibility to start a candid conversation about how our clients can financially prepare for the likelihood that they will need more — and more expensive — healthcare services as they age.”
Pellegrino points to long-term care as an example.
“Extended care is expensive, and most people I talk to think that they won’t need it,” he says. “But that isn’t a possibility you want to face without preparation.”
For context, long-term care is a term that refers to all services that are meant to support a patient’s health or personal care needs during a short or extended period. These services range from homemaker assistance (i.e., preparing meals, cleaning, assisting with daily activities) to round-the-clock medical support and care. Some long-term care services can be affordable — or freely — provided by friends, family, or community organizations. However, some patients may require attention at a paid facility or day center.
And the latter, as Anthony Pellegrino points out, can be undeniably expensive. According to a report from Genworth, the national annual median cost of care in 2019 ranged from $19,500 for adult day health care services to $102,200 for a private room in a nursing home. Moreover, these costs are on the rise; the same report also found that nursing home expenses rose 1.82 percent annually. For homemaker services, the increase was even steeper, at 7.14 percent.
These statistics clearly illustrate that even a short long-term care need can be expensive — and yet, Goldstone Financial Group’s advisors often find that their clients haven’t considered the potential financial risk.
“There are a few major misconceptions that we hear a lot,” Anthony Pellegrino says. “One is that our clients will be healthy until they pass — or that family members will be around to help out if they become ill.”
While there is a chance that a person could enjoy their sunset years without ever needing long-term care, the odds are somewhat slim. According to statistics provided by Health and Human Services, a person who is 65 today has a 70 percent chance of needing long-term care services during their remaining lifetime. Moreover, HHS notes, while up to a third of 65-year-olds might not ever need extended care, 20 percent will need it for longer than five years. The average stay differs between genders; women often need care for 3.7 years, while men usually only need support for 2.2 years.
“Family members or a spouse might provide some care,” Pellegrino says. “But sometimes, circumstances or family dynamics don’t allow for anything other than facility care.”
Pellegrino further points out that while Medicare Part A will pay for some hospitalization expenses, it won’t cover them all. Medicare will only cover the full cost of facility care for 20 days. Then, for the next 80 days, the program will require patients to contribute a co-payment before it pays the remaining balance. After 100 days, seniors are responsible for addressing care costs on their own.
“It’s a real financial risk,” Pellegrino asserts. “Some of our higher-earning clients will tell us that they have enough in savings to cover the cost if and when they need to, but I always have to ask them — why sacrifice that money if we can find a better way?”
Goldstone Financial Group is dedicated to providing its clients with the tools and knowledge they need to build a sturdy financial path into retirement. Part of that goal is identifying pitfalls along the way — and providing clients with the means to avoid them.
Today, Pellegrino and his team often provide guidance on how clients can protect themselves from the financial drain posed by long term care. A few of the firm’s suggested solutions include taking out a long-term care plan or, if no standalone policies are available, opting into a long-term care rider via a life insurance policy or annuity. Goldstone’s fiduciaries often stress that these actions should be taken before retirement so that retirees can ensure coverage and obtain low premiums.
That said, a financial solution that works for one retiree may not work for another. Goldstone Financial Group recognizes that every client’s financial situation is different — so when a Goldstone fiduciary takes on a case, they carefully consider all of the factors at play before making any recommendations.
“At the end of the day, taking out long-term care coverage isn’t just about saving money,” Anthony Pellegrino says. “It’s also about clarifying how and where you want to receive care. It protects your health and ensures that your estate can pass on to your loved ones without a financial loss.”
“At Goldstone Financial Group, we care about you — your hopes, your finances, and your future. Our driving goal is to support our clients as much as we can, as often as we can.”
It’s fair to say that Pellegrino and his firm have accomplished that so far.
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