Huge $30 Trillion Wealth Transfer in Progress
Boomers, Late-Boomers, and GenXers have big bucks. They are also getting older. Long-term care costs may go from families to caregivers and facilities unless action is taken now.
The steep and rising cost of long-term health care can easily wipe out an estate in a relatively short time. $30 trillion in financial and non-financial assets should pass from the baby boomers to their children in the next 30 to 40 years. The boomers are the wealthiest generation. However, there are storm clouds on the horizon that could change all that in the coming years.
The problem is few Baby Boomers (including Late-Boomers) or Generation X members have an advance plan for long-term health care. These costs can dramatically impact this transfer of wealth, which would have been earmarked for their children and grandchildren and instead go to caregivers and facilities.
Long-Term Care Costs Drain Assets Fast
The cost of long-term care services and supports is enormous. Most long-term care is delivered at home; those costs, while expensive, are less than assisted living, memory care, and nursing home costs. The LTC NEWS Cost of Care Calculator shows you the financial impact where you live, not only now but in the years ahead.
According to CNBC, if the boomers want to pass their wealth to their children and grandchildren, they better consider affordable Long-Term Care Insurance.
The best time to purchase Long-Term Care Insurance is when you are in your 40s or 50s since these policies are medically underwritten and priced, in part, by your age when you obtain coverage. However, some boomers didn't plan, and now they are in their upper 60s or 70s.
Options for Older People or Those with Some Health Problems
If you need care now, it is too late. There are, however, options for older adults with reasonable health. Two insurance companies offer unique annuities with Long-Term Care Insurance. You pay one time with the initial deposit creating a much larger amount of money in tax-free long-term care benefits. You get money from the policy by either needing long-term care, cashing the policy out, or dying. One way or another, you, or your family, will get money from the policy.
There are life insurance "hybrid" policies that also offer long-term care benefits. However, be careful, as some have policy language making it hard to get money for long-term care or plans that cannot even legally be called long-term care.
Seek Professional Help with LTC Insurance Options
A qualified and experienced Long-Term Care Insurance specialist can discuss these options. Experts suggest talking with a specialist since most financial planners or general insurance agents have little experience in how these products work, how they are underwritten, or even how they get used at the time of claim.
Limited duration or 'short-term' policies offer one or two years of care and are much more flexible with underwriting. Again, a specialist can discuss if it is appropriate for you.
The bottom line is it is better to plan early, ideally before you retire, instead of waiting when you are much older. More options are available when you are younger and healthier, and costs are very affordable.
However, if you are older, you may still have good options available but be sure to speak with a qualified specialist.
LTC Insurance will safeguard those assets and ease the burden care places on the family.