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AES Employees: Navigating the Complexities of Extended Care Costs in Retirement

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Addressing the potential risks of extended-term care expenses may be one of the biggest financial challenges for AES employees who are developing a retirement strategy.

Seven in ten AES employees over age 65 can expect to need extended care services at some point in their lives. So understanding the various types of extended care services – and what those services may cost – is critical as you consider your retirement approach.

What Is Extended Care?

Extended care is not a single activity. It refers to a variety of medical and non–medical services needed by those who have a chronic illness or disability – most commonly associated with aging.

Extended care can include everything from assistance with activities of daily living – help dressing, bathing, using the bathroom, or even driving to the store – to more intensive therapeutic and medical care requiring the services of skilled medical personnel.

Extended care may be provided at home, at a community center, in an assisted living facility, or in a skilled nursing home. And extended care is not exclusively for the elderly; it is possible to need extended care at any age.

How Much Does Extended Care Cost?

Extended care costs vary state by state and region by region. The 2021 national average for care in a skilled care facility (single occupancy in a nursing home) was $108,405 a year. The national average for care in an assisted living center (single occupancy) was $54,000 a year. Home health aides cost a median of $27 per hour, but that rate may increase when a licensed nurse is required.

What Are the Payment Choices?

Often, extended care is provided by family and friends. Providing care can be a burden, however, and the need for assistance tends to increase with age.

AES employees who would rather not burden their family and friends have two main choices for covering the cost of extended care: they can choose to self-insure or they can purchase extended care insurance.

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Many self-insure by default – simply because they haven't made other arrangements. Those who self-insure may depend on personal savings and investments to fund any extended care needs. The other approach is to consider purchasing extended care insurance, which can cover all levels of care, from skilled care to custodial care to in-home assistance.

When it comes to addressing your extended care needs, many look to select a strategy that may help them protect assets, preserve dignity, and maintain independence. If those concepts are important to you, consider your approach to extended care.

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What is the AES 401(k) Savings Plan?

The AES 401(k) Savings Plan is a retirement savings plan that allows AES employees to save a portion of their salary on a pre-tax or Roth after-tax basis.

How does the AES 401(k) plan work?

Employees can contribute a percentage of their salary to the AES 401(k) plan, and AES may match a portion of those contributions, helping employees grow their retirement savings.

What is the maximum contribution limit for the AES 401(k) plan?

The maximum contribution limit for the AES 401(k) plan is determined by the IRS and may change annually. Employees should check the latest IRS guidelines for the current limit.

Does AES offer matching contributions to the 401(k) plan?

Yes, AES offers matching contributions to the 401(k) plan, which can help employees increase their retirement savings.

When can I enroll in the AES 401(k) Savings Plan?

Employees can typically enroll in the AES 401(k) Savings Plan during the initial onboarding process or during the annual open enrollment period.

How do I change my contribution percentage for the AES 401(k) plan?

You can change your contribution percentage for the AES 401(k) plan by accessing the employee benefits portal or contacting the HR department for assistance.

What investment options are available in the AES 401(k) plan?

The AES 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles, allowing employees to choose based on their risk tolerance.

Can I take a loan from my AES 401(k) plan?

Yes, AES allows employees to take loans from their 401(k) accounts under certain conditions. Employees should review the plan's loan policy for details.

What happens to my AES 401(k) if I leave the company?

If you leave AES, you have several options regarding your 401(k), including rolling it over to an IRA or a new employer’s plan, cashing it out, or leaving it in the AES plan if permitted.

Is there a vesting schedule for AES's matching contributions?

Yes, AES has a vesting schedule for matching contributions, meaning you must work for a certain period before you fully own the employer contributions made to your account.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

AES announced a significant restructuring effort in 2024 aimed at streamlining operations and improving efficiency. This includes potential layoffs and adjustments to employee benefits.

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For more information you can reach the plan administrator for AES at 4300 Wilson Boulevard, 11th Floor, Arlington, VA 22203; or by calling them at (703) 522-1315.