By the time you reach age 40, you should have resources set aside for your future retirement. Planning for a successful future retirement takes some effort. It would be best if you used your employer’s 401(k) option. If your employer doesn’t offer a 401(k), 403(b), or defined retirement plan, you should make an effort to save money in an IRA. If you are self-employed, you must open an SEP account. However, planning is not just about saving money.
What happens when your state of health changes due to a long illness, an accident or simply the impact of aging? As you age, these health risks increase dramatically. Will your pension plan survive longevity?
Long-term care retirement planning has become a top priority for many Gen Xers and baby boomers. Many people between the ages of 40 and 70 have personally experienced the impact of long-term health care with a parent or other loved one.
The problem is that too many people forget to protect those retirement funds from the high costs of long-term care. The costs and financial burdens that come with aging will impact you, your family, your savings and your lifestyle.
You will experience changes in your health, body, and mind, which will increase your need for long-term health care. Caregiving is a challenge for your family. Depending on your children to take care of them is not a good plan. They have or will have their own careers, families and responsibilities. It’s not that they don’t like you, but having a son or daughter or in-law as a caregiver is stressful. It can also impact their health and career.
Spouses are also not a good option for caregiving. As they age, they will age too. They will also have their own health and age issues to deal with.
Paid care depletes your assets and negatively impacts your income and lifestyle. According to the LTC NEWS Cost of Care Calculator (www.ltcnews.com), the cost of long-term care services and supports continues to rise. Even a large nest egg can be negatively affected.
The current national average cost of home care, based on a 44-hour week, is nearly $4,500 per month. Basic assisted living costs start at $4,300 per month, plus add-ons depending on your needs. Skilled care in a nursing home costs an average of $8,900 per month, or more than $100,000 per year. The cost of long-term care services increases over time.
Many people mistakenly assume that Medicare will pay for all long term care needs in the future. Medicare, medicare and supplements only pay for a limited number of qualified services – and only if you get better. These insurance options do not cover the costs of daycare services, which facilitate the activities of daily living. However, most people need child care as they get older.
Although most long-term care happens when we are older, people of all ages need extended care. Dementia praecox, including Alzheimer’s disease, the best-known form of dementia, can occur even in your thirties. Parkinson’s disease, multiple sclerosis and even strokes occur at a younger age.
It is your good health today that gives you the ability to plan ahead.
Medicaid, the welfare program, can pay for long-term care, but you have to be poor or end up poor. For most people, this is something you want to avoid.
The fact is, the financial costs and burdens of aging will impact your savings and your family. Affordable long-term care insurance protects your assets and eases the burden that would otherwise be placed on your family.
Although some people think long-term care insurance is expensive, it’s actually very affordable for most people, especially if you’re planning ahead of retirement. Premiums can vary by more than 100% between insurance companies.
If you’re in reasonably good health, these policies can easily fit into most people’s budgets. The problem is that too many people are looking for a financial advisor or a general insurance agent with little knowledge in this field. They often make recommendations that are too broad or sometimes too few. Additionally, many of these professionals only work with one or two insurance companies. Since they don’t fully understand how fonts are used at the time of claim, their recommendations aren’t what you might actually need.
Additionally, 45 states offer long-term care partnership policies, which provide additional dollar-for-dollar asset protection.
There are several types of policies that are available in most states. These include traditional plans, partnership plans which offer additional asset protection, single premium “hybrid” plans, which also offer a death benefit, and short term plans which offer broader age and health.
The key is to work with a long term care insurance specialist who works with major insurance companies. I always ask many detailed questions to design an appropriate plan based on the client’s specific concerns and budget.
The cost of long term care services varies from place to place. Most claims start with home care, and many people avoid a nursing home altogether because they receive the appropriate care at home or in an assisted living facility. These costs are much lower than those of qualified services in a nursing home.
Long-term care insurance will pay benefits at home, in adult day care centers, assisted living facilities, memory care and in traditional nursing homes. With most policies, you and your family decide how you use your benefits.
Does long term care insurance work? Absolutely. In 2020, major insurance companies paid more than $11.6 billion in benefits to American families. These families would otherwise have had to deplete their own assets to pay for care, arrange for family members to become caregivers, or both.
Since the policies are tailor-made, you can decide what is important to you. The key is to plan ahead of retirement. Long term care insurance is not sexy. It doesn’t shine like a new car or a new piece of jewelry. You might not show your policy at a party. However, it will give you and your family peace of mind.
Working with a long term care specialist will give you the precise information you are looking for. Start your search in your 40s and 50s when you have the most affordable options.
The fact is, long-term care insurance is easy, affordable, and provides stable income and asset protection.