Prepared for the Financial Risks of Retirement?
We have seen long-term care in the news throughout the COVID-19 virus crisis. It was eye-opening to see the conditions of some nursing homes. It was sad to see loved ones separated from their family members because of the virus crisis.
Many families removed loved ones from long-term care facilities, even good ones, due to the fear of COVID-19. These family caregivers quickly saw the difficulties of juggling caregiving with their careers and other family responsibilities.
We saw the stories on the news. We heard from family members on talk radio. It was impossible to ignore the significance that long-term care has on American families and their finances.
Few of us want to put this burden of caregiving on our families in the years ahead. Family caregivers must deal with physical and emotional demands in their role as a caregiver for a parent.
Thinking About Retirement? Thinking About Aging?
Over the years, I have had clients admit that they could not focus on long-term care and retirement planning because it was scary. It is natural to fear the unknown. Most of us know the facts. We all get older and face declining health in our so-called 'golden years.' At the same time, we face longer lifespans, and that takes more money. Longevity requires planning.
Hopefully, if you are at least 40 years old, you have done more than think about your future retirement. Retirement is not easy. You must have enough money saved to say goodbye to your job.
The COVID-19 virus crisis has paralyzed some people from doing anything. There are people, maybe yourself, that are fearful of making any plan. You cannot make decisions as you fear it is the 'wrong time.' Some people have stopped contributing to their employer's 401(k) plan or other savings.
If you feel this way, you are not alone. Yet, every day, you get a day older. Are you any wiser? The saying, "those who fail to plan - plan to fail," comes to mind.
Even if you are doing everything you need to do to prepare for a successful future retirement, the question remains - have you built a wall around those assets?
There are several unknowns. You can't time the market. The market has ups and downs. The key is to think long-term and make regular contributions to retirement accounts.
Long-Term Care – Part of Retirement Planning
What about long-term health care? Your health, body, and mind will change as you get older. Just compare your current 'self' with your 'self' at age 25. Now, imagine the changes in the next 20+ years.
Many of these changes increase your risk of needing help with daily activities or even supervision due to memory loss. Aging happens. Are you prepared for the costs and burdens of longevity? Extended health care costs money.
Long-term health care is a huge cash flow issue. However, long-term care also becomes a family issue. Even if one of your children would have the time to be a caregiver, the role of caregiving changes the relationship.
Are you planning or planning to fail? The problem is too many people, maybe yourself at the moment, forget to or ignore protecting those retirement funds from the high costs of long-term care.
Good Chance You May Need Care in the Future
A new study shows that an average healthy 65-year-old couple has a 75% probability of one partner requiring a significant level of long-term health care during their lifetime.
There are so many statistics. Perhaps the most important one is this one - long-term care will either happen - or it won't. When you are faced with long-term health care, where will the money come from? Which account would be liquidated first? How would take affect lifestyle and legacy? Which one of your kids - or their spouses - will make the decisions? Will one of them become your caregiver? If they become a caregiver, how will the role of being a caregiver impact their life, their career, their health, and their family?
So many questions. Have you asked the questions? Have you tried to answer the questions?
LTC Costs Increasing Due to Higher Demand
Long-term health care costs are not cheap but don't expect health insurance, including Medicare and supplements, to pay for these costs. Medicaid will pay for long-term care services, but you must have little or no assets. Your family? Family caregivers face a tremendous amount of physical and emotional stress and anxiety. Unpaid family caregivers number 53 million Americans and find it difficult to juggle their jobs and families with their roles as mom or dad's caregivers.
Paid professional in-home care is preferred over nursing homes and other long-term care facilities. You can find quality care but at a cost. The LTC NEWS Cost of Care Calculator says the national average cost of long-term care in a nursing home is over $100,000 a year. In-home care, adult day care, assisted living, and memory care can cost less, but none of it is cheap.
The cost of care does vary depending on where you live. For example, the cost of all long-term health care in New York is much more expensive than in Texas. The cost of care increases every year so that the current expensive cost will be even more staggering in twenty-five years.
How long will your savings last if you must pay for care yourself? Even if you have millions, you can still feel the pain. Your family will feel the pain and emotion as well.
LTC Insurance Works
The solution many American families are turning to is affordable Long-Term Care Insurance. These policies are already helping families keep their loved one at home. In 2020 the top companies paid over $11.6 billion in benefits from Long-Term Care Insurance.
You may have read that Long-Term Care Insurance is expensive or has many premium increases. The truth is that the policies are very affordable for most families and are custom designed to fit your needs. However, premiums do vary over 100% between insurance companies.
There are several types of policies available for consumers to consider:
- Traditional Long-Term Care Insurance - This is the type of plan that most people select, and you get the most benefit at the best value. In 45 states, Partnership Long-Term Care Insurance offers dollar-for-dollar asset protection.
- Asset-Based or 'hybrid' policies - These plans are life insurance or annuities with a rider for long-term care. You get both a death benefit and a long-term care benefit. You will pay more, but you are guaranteed to get the money one way or the other.
- Short-term or limited duration plans - These types of plans are not available in every state, but they offer a limited amount of benefit with broader underwriting health rules.
Every company has its own underwriting criteria and price points. The best advice is to start planning before you retire, ideally in your 40s or 50s when your general health is still reasonably good and you can enjoy lower premiums.
Plan for the Challenges of Longevity
Don't ignore the challenges that come with getting older. You can give your loved ones the time to be family instead of caregivers. You can safeguard income and assets as you obtain access to your choice of quality care.
It is probably fair to say that few people get 'excited' about buying insurance. However, with a long-term care solution, you are buying peace of mind. You are buying a plan so your loved ones have the time to be family and not caregivers.
Once my clients get their policy in the mail, they usually say thank you. The onus of future long-term health care, costs, and family burden is lifted from them and their families. Now, they can go worry about something else.