How to pay for Long Term Care
By Steve Gaito
I specialize in retirement planning and one of the greatest risks that people face is a Long-Term Care event. The Chance of needing Long-Term care is 70%. Think about this if you were getting on a plane that had a 70% chance of flying most would not get on that plane. For that matter, if it were 30% most would not. The reality is that most people just don’t think about it. I have had to work with many of my clients that are dealing with their parents and the cost of care. With inflation out of control so is the cost of care for Long-Term Care. Most people cared for a family in the home and today it is still the most common form of care, but that does come with a cost. Home health care is up 15% from a year ago and to have even homemaker services exceed $52,000 in NC. A semi-private (fancy word for roommate) room is almost $90,000 a year and in 10 years is expected to be more than $120,000. With many people needing 2-4 years of care it is easy to expect that you will spend between $250,000 and $500,000 for your care in retirement. The question is how you will pay for this. In the past Long-Term Care has been like your homeowner’s insurance. It is a use it or lose it plan. You pay into it until you either can’t afford it or you pass away. There is also a huge risk of your premium increases when you can least afford it. Today I see Long Term Care being funded in two different ways depending on the resources and needs of my clients. The first way is asset-based Long-Term Care. This is a Life insurance policy that earmarks and leverages money for your care. It can be anything from 2 years of coverage to a lifetime. It can be for a single or a married couple and if you do not use it the death benefit which is usually like the premium paid is disbursed to the beneficiary tax-free. As an example, a couple of 65 and 64 can fund their plan with 5 payments of $50,000 and have around $72,000 each for life to cover Long Term care expenses and if they never lose it the death benefit would be almost $300,000. Some people do not have the resources or there is a need for income now. Some indexed annuities provide current income and if you have 2 of the 6 qualifying activities of daily living your benefit may be increased. So, if the same couple put $200,000 in an annuity and they were receiving $10,000 in income they could see a benefit near $15,000 for up to 5 years. It is not as great of a benefit as asset-based care but is still more income which will help in a time of need.
What I have found is the best way is to look at all your retirement needs and resources and plan according to what you need and can afford. Having some long-term care protection is better than none. I provide a free no-obligation consultation and will help you understand what your best option is for covering the cost of care. To schedule, your appointment contact Morgan at firstname.lastname@example.org or (828) 559-0299.
Steve is the owner of Faith-Based Health Care and Retirement Resource Management. He is a National Speaker on the topic of Social Security optimization, quoted in national publications like Money Magazine, US News and World Reports, and Fox Business. Steve loves to educate and teach on financial topics like taxation of retirement accounts, long term care, healthcare, and efficient savings plans for small businesses. He has provided financial planning for missionaries through the International Mission Board. You can find Steve at 68 South Main St. in Marion, NC by calling 828-559-0299, email email@example.com or visit his website at www.faithbasedhc.com.
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