5 Steps To Plan For Long Term Care

by BlogLong term care

As the years go by and we get closer and closer to our golden years, we tend to forget that we may need to have some form of long-term care once we get to that period in our lives. The truth is that about 70 percent of people will need long-term care. One way to avoid this extra cost during retirement is to make sure we are taking care of ourselves now. However, sometimes long-term care is needed regardless to accomplish everyday activities while we are in our retirement years. While you plan for your retirement with your retirement advisor you should consider the potential situation of long-term care, to make sure you have the funds for it. To better prepare yourself should this day come, here are some steps to take in your planning process.

Get Educated

Knowledge is power and this applies to most aspects of life, and especially so with retirement planning. The more you know about retirement and all of its variables the better you can plan and have a successful retirement. With the help of a retirement advisor to help with your planning, you can learn about the many options for long-term care and which will be a good fit for you. Learn about the different options such as assisted living, home health services, independent living, adult day care, and hospice to understand what each option have to offer.

Get To Know What’s In Your Area

After you educate yourself on different aspects of long-term care, you should see the types of facilities that are available to you in your area. Reach out to state agencies on health or aging to find lists of long-term care providers around the area. Whether you decide to look through a state or federal agency, you will be able to look up different providers for the type of care you think you will need in your golden years. One thing to caution is to not solely rely on the internet or online reviews when choosing a provider. Once you have narrowed down your search, you will want to take a tour of the facility to learn more about what they can provide.

Start Planning For The Cost

Having long-term care will add on an additional cost that you will have to save for while planning for your retirement. These costs will vary depending on the facility you choose and the types of care they provide as well as what you will need in your golden years. This is where taking a tour of the facility is important as you can get concrete prices, billing practices, and if they accept assistance programs. One of the biggest misconceptions is that Medicare pays for long-term care but it sadly does not. Medicare will help pay for a short stay in skilled nursing homes or hospice care providers but not for care with assistance with daily activities (such as dressing and eating). If you have Medicaid instead then it will cover for long-term care. However, Medicaid programs themselves, as well as the eligibility for services, will vary from state to state.

Make A Plan

After learning about and visiting potential facilities, it is finally time to start advance care planning. With long-term care plan, you can discuss values and goals with loved ones and physicians. With this type of planning, you can set up advance directives. These are written instructions that are intended to reflect patient wishes for health care to guide medical decision-making in the event that a patient is unable to speak for themselves. These directives should be filed with the nursing center or living facility that you choose if you decide you need long-term care.

Communicate Your Medical Wishes

While planning for retirement and especially long-term care, you will need to disclose medical information to your loved ones. This will ensure there is no confusions, disagreements, or questions in the event you may not be able to make any medical decisions. This is where your advance directives will also come in handy as not only can you specify your medical needs but also what to do if the preferred long-term care provider can no longer take you. Whether it is a financial reason or no space to have you, your loved ones will need to know the next action to take.

If you have more questions about long-term care, be sure to contact us!

Why Simply Saving for Retirement Isn’t Enough? Part 2

by Health InsuranceIncome PlanningLong term careRetirement AdvisorRetirement IncomeRetirement Income PlanningRetirement SavingsUncategorized

As I mentioned in part 1 of this multi-part blog post, simply saving for retirement isn’t enough. There’s a myriad of things that can go wrong in retirement. And you MUST be prepared. Preparedness is the key to many of life’s challenges. Unfortunately, many simply “put off” planning for another day. Days turn into weeks, weeks into months and months into years and before you know it, BOOM, retirement is right around the corner. And you’re not ready. This bring me to our first and most important retirement threat:

Neglecting to prepare, either on your own or with a retirement specialist, a comprehensive plan that addresses all the potential threats and risks we all could face in retirement, as well as your income needs and income projection. Will you have enough to last throughout retirement and how will you fund the emergencies of retirement? Her Retirement offers a full “Are You Ready” assessment to determine any gaps in your plan, or to create a plan for you.

Here’s 5 other threats to consider. We’ll cover several more in part 3 of this blog series.

  1. Death of a spouse (without life insurance). While it’s true many pre-retirees are over-insured, the opposite is true as well. Life insurance is certainly critical while you still have a mortgage or other debt obligations, as well as young children to support. But we also feel that you do need life insurance as you are nearing retirement.  The threat is that you or your spouse could die without insurance and you would need to take from your retirement savings to cover your living expenses.  More than 2 in 5 Americans say they would feel a financial impact within six months of the death of a primary wage-earner, according to a 2015 report from the industry group LIMRA and the nonprofit group Life Happens. In addition, 30% of Americans think they don’t have enough life insurance, the report said. Term life insurance policies can be aligned with your retirement age so that it can cover you and your spouse during those important wage earning years and replace the earnings in the event of a pre-mature death of either partner. Her Retirement offers a full life insurance assessment to determine if you’re under-insured or over-insured, and then we can help match you with the right insurance based on your circumstances.
  2. A healthcare crisis. Unfortunately, medical debt is a leading cause of bankruptcy for many. For those that can afford to cover illness or medical emergencies with their savings, it can prevent you or your spouse from working in the final stretch before retirement. In addition, covering these expenses significantly impacts your retirement nest egg. There’s several types of insurance to consider including disability insurance and long-term care insurance.  Her Retirement offers a long term care/medical insurance assessment, as well as some unique ways to fund these expenses outside of insurance.
  3. Scams and more scams. Retirees are a big target for scammers. We’ve all heard the nightmare stories. These scammers take advantage of people’s fears. A perfect example are life insurance policies marketed at 702 retirement accounts. Scammers will sometimes use early retirement seminars as a forum to sell these policies. Financial Industry Regulatory Authority (FINRA), the industry oversight organization, advises buyer beware for any scheme or program, like these that promises unrealistic returns of 12% or more, as well as anything promising that you can retire early and/or make more money in retirement than you did in your working years. Here’s a link to the more scams and how to protect yourself and your loved ones
  4. The kid(s) that come back. Some call these boomerang children. Just when you think you have an empty nest, some one of them or worse yet, all of them return!  I just experienced this myself with the return home of my 24 year old son. While a part of me was excited to have him in the house again, the other part of me was calculating the cost to have him back home. Many pre-retirees continue to support children who are considered adults. According to the March 2015 study by Hearts & Wallets, an investment and retirement research firm, those 65 years or older with financially independent children are more than twice as likely to be retired than people of the same age group who financially support their adult children. That’s because those who are still supporting their kids are often putting off retirement to do so,said Hearts & Wallets co-founder Chris Brown. Ideally, we want to help our children become independent from the get go so they can avoid ending up on your doorstep, but we know this isn’t always the case, especially in these times. My son attended one of the best colleges in the world and he’s in my spare bedroom as I write this. The best way to protect your retirement savings from the kids that come back is to help them get financially independent as quickly as possible and ask for them to pay their fare share of the household expenses. Read these tips for surviving your child’s return home (I think I need to read this a couple times!)
  5. Giving grandma a hand out and a hand up. The statistics are pretty convincing that baby boomers are caring for their aging parents and giving up some of their retirement savings in the process. My mother used to say, “I never want to be a burden to my children.” And so far she hasn’t been a burden at all. But, she was properly prepared and to her credit worked as a teacher for 35 years and has a good pension and a good medical plan. Some 11% of adult children under 65 provide financial assistance to their parents, according to the National Institute on Aging’s 2015 Health and Retirement Study. Further, 25% of adult children under age 65 help parents with things like chores and personal care, often at the expense of having their own paying job. In fact, people age 50 and older who care for parents lose an average of $303,880 in pay, Social Security and pension benefits, according to a 2011 MetLife report! Here’s some resources for caring for your elderly parents

While it’s unrealistic to avoid these and many other retirement threats, it’s best to consider what you may face just before retirement and in retirement and make sure you have a Plan A…and a Plan B. This plan, as we discussed above, needs to include not just you, but your spouse and your entire family.

To chat about your plan with an affiliated advisor, please request any one of our assessments here.

Five Questions about Long-Term Care

by Long term care
1. What is long-term care?

Long-term care refers to the ongoing services and support needed by people who have chronic health conditions or disabilities. There are three levels of long-term care:

  • Skilled care: Generally round-the-clock care that’s given by professional health care providers such as nurses, therapists, or aides under a doctor’s supervision.
  • Intermediate care: Also provided by professional health care providers but on a less frequent basis than skilled care.
  • Custodial care: Personal care that’s often given by family caregivers, nurses’ aides, or home health workers who provide assistance with what are called “activities of daily living” such as bathing, eating, and dressing.

Long-term care is not just provided in nursing homes–in fact, the most common type of long-term care is home-based care. Long-term care services may also be provided in a variety of other settings, such as assisted living facilities and adult day care centers.

2. Why is it important to plan for long-term care?

No one expects to need long-term care, but it’s important to plan for it nonetheless. Here are two important reasons why:

The odds of needing long-term care are high:

  • Approximately 70% of people will need long-term care at some point during their lifetimes after reaching age 65*
  • Approximately 8% of people between ages 40 and 50 will have a disability that may require long-term care services*

 

The cost of long-term care can be expensive:

For many, the cost of long-term care can be expensive, absorbing income and depleting savings. Some of the average costs in the United States for long-term care* include:

  • $6,235 per month, or $74,820 per year for a semi-private room in a nursing home
  • $6,965 per month, or $83,580 per year for a private room in a nursing home
  • $3,293 per month for a one-bedroom unit in an assisted living facility
  • $21 per hour for a home health aide

*U.S. Department of Health and Human Services, December 1, 2016

3. Doesn’t Medicare pay for long-term care?

Many people mistakenly believe that Medicare, the federal health insurance program for older Americans, will pay for long-term care. But Medicare provides only limited coverage for long-term care services such as skilled nursing care or physical therapy. And although Medicare provides some home health care benefits, it doesn’t cover custodial care, the type of care older individuals most often need.

Medicaid, which is often confused with Medicare, is the joint federal-state program that two-thirds of nursing home residents currently rely on to pay some of their long-term care expenses. But to qualify for Medicaid, you must have limited income and assets, and although Medicaid generally covers nursing home care, it provides only limited coverage for home health care in certain states.

4. Can’t I pay for care out of pocket?

The major advantage to using income, savings, investments, and assets (such as your home) to pay for long-term care is that you have the most control over where and how you receive care. But because the cost of long-term care is high, you may have trouble affording extended care if you need it.

5. Should I buy long-term care insurance?

Like other types of insurance, long-term care insurance protects you against a specific financial risk–in this case, the chance that long-term care will cost more than you can afford. In exchange for your premium payments, the insurance company promises to cover part of your future long-term care costs. Long-term care insurance can help you preserve your assets and guarantee that you’ll have access to a range of care options. However, it can be expensive, so before you purchase a policy, make sure you can afford the premiums both now and in the future.

The cost of a long-term care policy depends primarily on your age (in general, the younger you are when you purchase a policy, the lower your premium will be), but it also depends on the benefits you choose. If you decide to purchase long-term care insurance, here are some of the key features to consider:

  • Benefit amount: The daily benefit amount is the maximum your policy will pay for your care each day, and generally ranges from $50 to $350 or more.
  • Benefit period: The length of time your policy will pay benefits (e.g., 2 years, 4 years, lifetime).
  • Elimination period: The number of days you must pay for your own care before the policy begins paying benefits (e.g., 20 days, 90 days).
  • Types of facilities included: Many policies cover care in a variety of settings including your own home, assisted living facilities, adult day care centers, and nursing homes.
  • Inflation protection: With inflation protection, your benefit will increase by a certain percentage each year. It’s an optional feature available at additional cost, but having it will enable your coverage to keep pace with rising prices.

We offer a complimentary Long Term Care assessment, simply let us know your interest.

The Importance of Long Term Care

by Long term care

“A person at age 65 has a 70% chance of needing some type of long term care during retirement, but fewer than 8% actually carry any type of long term care insurance.”

What would you do if you were suddenly faced with an additional yearly expense of $30,000 to $60,000 because of unexpected health care needs? Most Americans fear the financial consequences of a long-term illness and are unsure about how to protect themselves against it. What if your current health insurance policy only covered a small part of those costs? This also prompts the following questions:

  • How long could you afford these additional expenses?
  • How would these unexpected expenses impact the estate you hope to leave behind?
  • How would your lifestyle be affected while you are sick?

Long-term care insurance, which covers care received at home as well as care received in a nursing home, may be the right answer to these troubling questions. Long-term care policies can be an affordable and effective solution.

Long-term care is an important issue we could all potentially face. To depend on the government to pay these expenses—whether through Medicare or Medicaid—is not a feasible option. Medicare provides very limited coverage for long-term care, and Medicaid generally applies to only those with very limited assets. It’s important that you mitigate the risk of a Long Term Care event in your retirement plan.

Her Retirement offers a complimentary Long Term Care assessment to help you determine if it makes sense for you to purchase a policy. Our affiliated advisors also have strategies that help pay for your Long Term Care policy.  Request an assessment with us today

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Visit our Long Term Care page in the Knowledge Center for more information