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Long-Term Care: Families Face Steep Costs Even When It's 'Free'
Skilled care -- whether at home, in an institutional setting or by a professional caregiver -- is one of the most significant financial demands clients face in retirement, says advisor Joseph Birkofer with Legacy Asset Management, in Houston. "The average person has a vague idea of long-term care expenses and a lot of hope that their assets will cover them," he says. "They never sit down and actually identify the specific financial demands of their retirement days."

While professional LTC is expensive, "free" care provided by family members can be financially burdensome as well. Many people who end up relying on unpaid care do so out of necessity, says Jesse Slome, executive director of the American Association for Long-Term Care Insurance. "A significant number of people wait too long and the cost gets too high," he says.

But family members who end up acting as caregivers can incur significant losses. On average, those 50 and older who leave the workforce to care for a parent can incur income-related losses of $303,880, according to an earlier Metlife study cited in AARP's 2015 "Valuing the Invaluable" report. This takes into account the loss of wages and Social Security and pension benefit losses due to leaving the workforce early.

Whether clients choose unpaid care or rely on it out of necessity, it's important to understand the hefty costs of such care. -- Rajashree Chakravarty

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