Planning for Long Term Care (004)

If you are in your 40’s, 50’s, or even 60’s and healthy, long-term care may feel irrelevant. After all…there’s still time right?

Maybe not.

Here are a few common assumptions…or let’s call them potential blind spots:

• Medicare will pay for my long-term care expenses.

• My children will take care of me; I won't need long-term care.

• We can gift away our assets quickly so we can qualify for Medicaid.

According to the National Association of Insurance, the average annual cost of nursing care is $90,000, assisted living is $48,000, and home care is $34,000. If you are under age 70 or haven't had a friend, family member, or someone you know need long-term care, it's probably not on your radar. 

Here are some important facts to consider:

• 70% of retirees will need long-term care at some point. 

• Medicare does not pay for long-term care. Medicaid only steps in when you become financially destitute.

• Long-term care expenses can erode a lifetime of savings.

• Children are often incapable of assuming care duties.

• Long-term care premiums can and probably will increase. According to the American Association for Long-Term Care Insurance, annual rate increases are generally 2-4% in your 50's and 6 -8% in your 60's.

The bottom line, the expense will probably become a reality, and if your assets cannot cover your need, then insurance may be a viable option.   

One strategy is to look at your budget and add the cost of care while removing some offsetting lifestyle expenses you may have to sacrifice. Next, calculate whether your retirement can generate the income you will need over time.

I will admit that over my career, I have had more reactive discussions about long term care than proactive ones. It’s an easy topic to put off to “one day” in the future. Typically, the earlier you plan, the more options you have.

If you want to talk more about your specific long-term care needs and how it fits into your financial plan, click this link and let's schedule a time to talk.