The greatest-known risk factor for dementia is age. That means our longevity bonus has a dark side to it.

One in 10 of us over the age of 65 and one in three over the age of 85 are affected by this disease. By 2050, those numbers will triple.

Just about every person reading this will either have dementia or know someone who has it. The costs associated with the care of those affected are staggering, and they can wipe out a family’s resources.

The cost of an inpatient elderly care facility averages $3,600 per month. But when Alzheimer’s is involved – it accounts for 60% to 80% of all dementia diagnoses – the cost jumps by an additional $1,150 per month.

Many families try to limit the costs by providing care at home, but research indicates that 40% of the 4 1/2-year life expectancy of an Alzheimer’s patient will be spent in a memory care facility.

Most of the nonmedical care costs incurred there are not covered by Medicare.

Self-financing long-term care (LTC) is possible if you start early enough and can afford it. But for most folks, the only way to mitigate the financial effects that a dementia diagnosis will have is with planning.

An LTC policy is one of the few options, but these policies are often flawed.

Any LTC policy must be in place before a diagnosis of dementia has been made. And as I said in a previous article, there are daily living requirements in LTC policies that can severely limit when and if the benefits can be used.

Make sure your retirement planning includes the cash to cover your long-term costs or an LTC policy. And – most importantly – you must understand the limitations.

Unless there’s a miracle cure around the corner or Medicare comes up with the money to cover the expenses this disease will create, it is a huge question mark in all of our futures.

Don’t get caught with your hands in your pockets. This one is for real.

Good investing,