Will your retirement savings survive longevity and long-term care?

By the time you turn 40, you should have resources set aside for your future retirement. Planning for a successful future retirement requires some effort. It would be best if you use your employer’s 401(k) option. If your employer doesn’t offer a 401(k), 403(b), or defined pension program, you should make an effort to save money in an IRA. If you are self-employed, you must open a SEP account. However, planning does not end with saving money.

What happens when your health changes due to prolonged illness, accident, or just the impact of aging? As you get older, these health risks increase substantially. Will your retirement plan survive longevity?

Retirement planning for long-term care has become a top priority for many Generation Xers and Baby Boomers. Many people ages 40 to 70 have personally dealt with the impact of long-term health care with a parent or other loved one.

The problem is that too many people forget to protect those retirement funds from the high costs of long-term care. The financial costs and burdens of aging will affect you, your family, your savings, and your lifestyle.

You will experience changes in your health, body, and mind increasing your need for long-term care. Caring is a challenge for your family. Relying on your children to be the caregivers is not a good plan. They have or will have their own careers, families and responsibilities. It’s not that they don’t love you, but having a son or a daughter or an in-law as a caregiver is stressful. It can also affect their health and careers.

Spouses are also not a good option for caregiving. As you get older, so will they. They will also have to deal with their own age and health problems.

Paid care depletes your assets and negatively affects your income and lifestyle. According to the LTC NEWS Cost of Care Calculator (www.ltcnews.com), the cost of long-term care services and supports continues to rise. Even significant savings can be negatively affected.

The current national average cost of home care, based on a 44-hour week, is nearly $4,500 per month. Basic costs for assisted living facilities start at $4,300 per month plus surcharges based on your needs. Skilled care in a nursing home averages $8,900 a month, more than $100,000 a year. The cost of long-term care services increases over time.

Many people incorrectly assume that Medicare will pay for any future long-term care needs. Health insurance, Medicare, and supplements only pay for a limited amount of specialty services, and only if you’re getting better. These insurance options do not cover the costs of custodial services, which help with activities of daily living. However, most people require custody services as they get older.

While most long-term care occurs when we’re older, people of all ages require long-term care. Early-onset dementia, including Alzheimer’s disease, the best-known form of dementia, can occur as early as age 30. Parkinson’s, multiple sclerosis, and even strokes occur at younger ages.

It is your good health today that gives you the opportunity to plan ahead.

Medicaid, the medical wellness program, can pay for long-term care, but it must be poor or end poor. For most people, this is something you want to avoid.

The fact is that the financial costs and burdens of aging will affect your savings and those of your family. Affordable long-term care insurance protects your assets and eases the burden that would otherwise fall on your family.

Although some think long-term care insurance is expensive, it’s actually very affordable for most people, especially if you plan ahead of retirement. Premiums can vary more than 100% between insurance companies.

If you are in reasonably good health, these policies can easily fit into most people’s budgets. The problem is that too many people are looking for a financial adviser or general insurance agent with little knowledge in this area. They often make recommendations that are too big or sometimes too small. Also, many of these professionals only work with one or two insurance companies. Since they don’t have a good understanding of how policies are used at the time of claim, their recommendations are out of line with what you may actually need.

In addition, 45 states offer Long-Term Care Partnership policies, which provide additional dollar-for-dollar asset protection.

There are several types of policies that are available in most states. These include traditional plans, association plans that provide additional asset protection, single premium ‘hybrid’ plans, which also offer a death benefit, and short-term plans that offer more extensive age and health requirements.

The key is to work with a Long Term Care Insurance specialist who works with all major insurance companies. I always ask lots of detailed questions to design an appropriate plan based on the client’s specific concerns and budget.

The cost of long-term care services varies from place to place. Most claims start with home care, and many people avoid a nursing home altogether, instead receiving appropriate care at home or in an assisted living facility. These costs are much less than specialized services in a nursing home.

Long-term care insurance will pay benefits at home, adult day care centers, assisted living facilities, memory care, and in traditional skilled nursing homes. With most policies, you and your family can decide how to use your benefits.

Does long-term care insurance work? Absolutely. In 2020, the major insurance companies paid more than $11.6 billion in benefits to American families. Otherwise, these families would have had to deplete their own assets to pay for care, have family members become caregivers, or both.

Since the policies are custom designed, you can decide what is important to you. The key is to plan before retirement. Long-term care insurance is not sexy. It doesn’t shine like a new car or a new piece of jewelry. You may not show your policy at a party. However, it will give you and your family peace of mind.

Working with a long-term care specialist will allow you to get the precise information you are looking for. Start your research in your 40s and 50s when you have the most affordable options.

The fact is, long-term care insurance is easy, affordable, and has a stable rate of income and asset protection.