Millionaires Should Have Long-Term Care Insurance
A million dollars is not what it used to be, but more people are getting to their first million. As more people invest in their employer's 401(k) and other retirement programs, their savings are growing. You add the money in your retirement plans plus current savings and investments and the value of a home more people just like you will soon (or may already be) a millionaire!
One out of every 10 American households will be worth at least $1 million within the next four years, and these individuals should be planning to protect their savings with Long-Term Care Insurance, according to the head of the American Association for Long-Term Care Insurance (AALTCI).
"Achieving this milestone is historic for millions of Americans, and their number one priority will be protecting that achievement," said Jesse Slome, director of the AALTCI. Slome was speaking recently to key Association members regarding the market outlook and future opportunities.
In a report released in 2020, there are 8.6 million millionaires in the United States, representing approximately 14% of U.S. households. Bloomberg says there are 1700 new millionaires made every day in the U.S.
Families with savings need a plan to address the financial costs and burdens that come with aging. Longevity is a significant risk on a family's assets. By the time you get into your 40s, if not before, you start seeing changes in your health and body. Once you get into your 60s many people will begin having a cognitive decline. As the decline increases, you start to require supervision.
The cost of long-term care services will significantly impact your income and assets, even if you are a millionaire.
"Individuals who have worked hard and saved throughout their life understand the risks that could impact their net worth, long-term care being the greatest risk as they age. What they don't know is how easy and affordable it can be to mitigate that risk," said Slome.
Longevity a Major Retirement Concern
Many consumers and financial planners discuss the costs and burdens of aging and how it impacts a retirement plan. With the advances in medical science, longevity has become a retirement issue.
The concern is the risk of running out of money when you are retired. The cost of long-term care is a significant factor many people don't consider.
Most people want to manage a long-term care situation without becoming dependent on their adult children or spouse. Generally, spouses are not the best caregivers because of their own age and health. Adult children have their own careers and family responsibilities. The role of being a family caregiver is physically and emotionally draining. Siblings often have conflict as usually one of them gets the job and takes on the pressure.
Family Caregivers Face Enormous Challenges
Caregiving is hard on family members and is emotional and challenging work. Writing in their blog, "Losing a Puzzle Piece," Jessica Conway Church and Shane Eleanor Conway McCoin write, "We can't always paint a rosy picture of caregiving. There are harsh realities, stress, and much hardship involved."
Long-Term Care Insurance will pay for care in any setting, whether it is your own home or adult day care center, assisted living facility, memory care, or nursing home. Quality care is not cheap.
Long-Term Care Costs are Significant
The cost of care can vary depending on location. The national averages are:
Median Annual Cost of Long-Term Care 2021
Adult Day Care (5 days/wk.) $20,456
Assisted Living - base cost (one-bedroom) $52,451
In-Home Health Aide (44 hrs./wk.) $55,004
Nursing Home (semi-private room) $97,578
Nursing Home (private room) $109,683
(LTC NEWS cost of care calculator)
To find the cost of care where you live, click here.
Do You Really Have A Lot of Money?
Just having a million bucks isn't like it used to be. Although being a millionaire sounds nice, the Financial Samurai says it's not that impressive any more thanks to inflation. If you retired today at 65 with $1 million and no Social Security, you'd only be able to spend $40,000 – $45,000 a year for 25 years until you'd run out of money.
Charles Schwab says that without Long-Term Care Insurance, the expenses of extended long-term care could quickly deplete your nest egg.
The expenses of care services are considerable and why the asset protection LTC Insurance offers becomes vital to both your lifestyle and legacy, but to mention the quality of care.
45 States Offer Partnership LTC Insurance
Most states offer partnership Long-Term Care policies that provide additional dollar-for-dollar asset protection. Partnership LTC Insurance will give you extra peace-of-mind as it safeguards your hard-earned assets from the costly costs of long-term care services. Learn more about Partnership Long-Term Care plans by clicking here.
Total Asset Protection
There are policies available that provide total asset protection. These policies offer unlimited long-term care benefits to eliminate any risk on your savings and investments. When you speak with a qualified Long-Term Care Insurance specialist, they can review your options and find the best option based on your age, health, financial situation, and family history.
If you have a substantial estate, the tax consequences of long-term care could make your cost even more expensive. If your family must sell assets to pay for care, you usually will incur taxes as you trade stocks, bonds, or even sell companies to pay for this care.
For example, many farmers own land, which is often worth millions of dollars. Without Long-Term Care Insurance, families will sell the farm to get the cash needed to pay for care.
Read more about the problems of America's farm families and long-term care by clicking here.
Long-Term Care Insurance is Affordable
Since premiums are very affordable, many families with significant estates will purchase Long-Term Care Insurance to limit the tax consequences of using their own money. But Long-Term Care Insurance is more than just about money.
Most policies provide other services like case management, which give the family the time to be family instead of the responsibility of being a caregiver or managing your future car situation.
If you have assets to protect, whether you have $100,000, $1,000,000, or more, an affordable Long-Term Care policy will help you make sure you don't run through your savings due to excessive care costs. It will also reduce the tremendous burdens extended care puts on family members.
For those families with over $10 million in assets, a Long-Term Care policy with unlimited benefits can offer total asset protection. A specialist will review your options, including options that include death benefits in addition to the long-term care benefit.
Experts suggest starting your planning before you retire as premiums are based on your age and health at the time to get a policy. Long-Term Care Insurance is medically underwritten, so you need to have reasonably good health to obtain coverage. Ideally, start planning in your 40s or 50s.