One of the biggest risks for retirement is not that you did not save enough, but all your savings are depleted by huge long term care cost.


You may have heard that JB nursing homes draw more and more Singaporeans. That is understandable. Because even with government subsidy, the nursing home cost in Johor Bahru is still substantially lower than the cost in Singapore.

The hard fact is that we all will grow old one day. Does growing old means living in a nursing home in Johor Bahru for Singaporeans? How can you prepare for the long-term care cost so it won’t end up draining your life savings before you can enjoy it? What is long-term care insurance and how does it work?

How much does long-term care cost in Singapore?

One of the main cost of long-term care is the nursing home cost. For the modern sandwiched middle class, you know both you and your wife have to work to support your children and your parents. So you will one day need either a domestic helper or home nurse to take care of the elderly.

It is reported that nursing home cost in Singapore ranges from $1,200 to $3,500 a month. For a bedridden patient, the figure will go up to $4,000 to $5,000 per month. Just imagine how much of your monthly income will be exhausted by this?

(1 Source: “JB nursing homes draw some Singaporeans”, 16th Feb 2009, The Straits Times. 2 Source: Assume 30 visits per month. 3 Source: NTUC ElderCare. Assumes 30 visits per month. 4 Source: “Improving home care”, 20 Dec 2010, The Straits Times.)

Unfortunately, most people are woefully unprepared to cope with such needs and expenses. Various studies have found that many Singaporeans admit that they are confused about how to approach future long-term care challenges.

How would you want to take care of your parents?

We all want to stay near our loved ones. Especially if our parents are old or disabled, we have to visit them often and support them both financially and emotionally.

But without enough financial means, would you be able to meet these kinds of day to day demand?

You may have heard about people selling their houses or business to pay for the medical and nursing costs. Some people have to quit their jobs to support the family members who are seriously ill. That is noble. But with proper financial planning, life could be much easier, isn’t it?

Long-term care insurance

If now you understand the risk of not having enough funds for long-term care costs, you will be happy to know that such risks can be transferred to insurance companies via a kind of product called long-term care insurance.

In a nutshell, long-term care insurance pays a fixed amount of benefit each month. This money can be used to pay

  • Expenses for long-term nursing treatment
  • Cost of hiring a domestic maid
  • Medical appliance and equipment which is not covered by integrated shield plans.
  • Even experimental medical treatment

In case you are not aware, if you are age 40 and above, you are already automatically covered under ElderShield. ElderShield is a national insurance scheme. It provides basic coverage to those who need long-term care, especially during old age. The monthly cash payments help pay for the care of a severely disabled person.

What is the problem with Eldershield?

Simply put, eldershield coverage is basic. It is designed to keep the premium affordable for all Singaporeans, so it just provides the bare minimum.

Low monthly cash payout

Even after enhancement in 2007, Eldershield provides only monthly cash payout of $400. That is payable if a member is unable to do at least 3 out of 6 of Activities of Daily Living (ADL), namely washing, dressing, feeding, toileting, mobility.

Is $400 enough? if you take a look at the real cost of nursing care above, you may be shocked how low this is.

Short payout period

Eldershield will only pay for 6 years, what will happen after that? Even if you receive the full payout, it is only $400 * 12 month * 6 years = $28,800.

Would it be enough for any person who needs long-term care?

What you could do

The good news is that you are allowed to upgrade eldershield for yourself and your parents. The best part you can use up to $600 Medisave per year to fund the upgrade. You are also allowed to use your Medisave to cover your spouse, parents or grandparents.

Currently, three insurers’ upgrade programs are approved by CPF board. They are

Review your medical insurance

Having long-term care insurance is the first step, but you can’t ignore medical insurance in retirement planning either. With the recent national changes from Medishield to Medishield Life, all the Medishield-upgrade insurance will be different. If you have any of the plans listed below, it is time for you to re-evaluate your private integrated shield plan.

  • AIA Healthshield Gold Max
  • Aviva MyShield
  • Great Eastern SupremeHealth
  • NTUC Income Incomeshield
  • Prudential PruShield

You see, if you are seriously ill, it’s not the end of the day. Long-term care and health care cost can be expensive, but with some simple planning, you can have the financial means you need to provide proper health care for yourself and family support for your parents.

If you find this article useful, why not share it by clicking the share button below.

Have you prepared yourself for the unavoidable long-term care costs in the future? What else do you think we can do? Comment below and share with us.

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

  • Religious prejudice aside, eg think what/who opposes pink dot.

    Why can’t we just legalise euthanasia like we did with the Advance Medical Directive.
    When we are young and is in a clear state of mind, we should be able to make a declaration on such arrangements.

    Why do you want to drag it out if the quality of life is already beyond sad?

  • {"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}