If you are a middle aged adult, chances are you have at least thought about long term care at one point or another. To be adequately prepared for such high costs, though, it’s important to put some plans into place to help yourself out in the future.
When people hear the term “long term care”, most people imagine a frail, elderly person in a nursing home, but that’s not quite the case anymore. More people are turning to retiree communities or in-home care to receive the care that they need, and it’s not just seniors, either. 40% of all long term care recipients are under the age of 65, which is why waiting to create a long term care plan until you have retired can be a big mistake.
As we move into the new year, consider the financial risk that long term care poses to your retirement portfolio and ask yourself these 3 questions when you are evaluating your options.
Do you have a family history of obesity, heart disease, or stroke? What about Alzheimer’s or some other form of dementia? These questions are important because they can help you determine if you are at a higher risk of a certain chronic disease than the average citizen.
If you do have a family history of a certain disease, research ways to prevent that disease like exercise, healthy eating, or daily social engagements. It’s crucial to be proactive in helping ward off these conditions so that you can live healthily for as long as possible. Knowing your family history is also helpful because if you are at a higher risk of a certain disease that will necessitate long term care, you already know that the chances of using a long term care insurance policy is higher than therefore, might be worth the purchase.
What does your portfolio look like?
If you do consider buying long term care insurance, you will want to take a long, hard look at your retirement assets and determine what type of policy best fits your situation. If you don’t have much saved in assets and you expect to enroll in Medicaid later down the road, taking out a long term care insurance policy likely isn’t an affordable option.
If you do have a significant nest egg set aside, though, long term care insurance can help you shield those assets from the high cost of long term care should you ever need it. If you are depending on Medicare to cover the cost of your care, it’s time to reconsider your game plan because Medicare does not pay for long term care. Too often, people are unaware of this and end up losing much of their retirement savings paying for care that they thought Medicare would cover. Be sure to educate yourself about the different options and know the requirements for each payment type so you know which choice makes the most sense.
How much do you need for care?
Judging how much you will need for long term care can be difficult, because situations vary so dramatically. Long term care averages $50,000 to $100,000 annually, so even just one year of care can cost you a huge amount. The cost can quickly deplete your nest egg, which is why most financial advisors don’t recommend self-insuring for long term care unless you have several million in assets.
Determining how much you will need for care and for how long can be difficult, but we recommend going with the average. About 85% of all long term care claims last less than 5 years, so a 5 year plan protects you from the major risk while ensuring your premiums won’t be too expensive. If you are interested in learning more about the different options for long term care insurance plans, fill out this form and we will be in touch with information shortly.
Planning for long term care may seem overwhelming, but it truly comes down to a few major factors when deciding how to prepare. Because Medicare won’t cover the cost, if you have substantial assets, your best bet is to protect those assets with long term care insurance. Read more about how long term care insurance is helping Texans stay in their homes or request more information about policies.