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Tuesday, September 29, 2015

Long Term Care: How to Avoid a Financial "Sick Bed" in Retirement

Retirees and current workers may need to plan to pay much more out of pocket for medical care during retirement than they realize. What can you do about this?  For current retirees, options are limited.  Workers still saving for retirement or nearing retirement have more options, if they start planning now. 

How do you start? Assess your future need for healthcare.  While most of us can’t know our future need for healthcare, we often can make a reasonable guess.  What is your health history? Are you overweight? Do you smoke? What is your family health history?  Study your options thoroughly before retiring.  Beyond any plan your employer may offer, what is available on an individual basis? 

 Long Term Care (LTC) insurance may be your best strategy for preserving your retirement savings and income.  According to a study conducted by Northwestern Mutual , the average hourly rate for Home Health Aides is $20.65.  The U.S. state annual average cost for a room in an Assisted Living Facility is $40,469.  The average annual cost  of a private room in a nursing home is $89,812 per year.  Can you imagine spending  this amount of money out of your retirement savings each year?  What if you had to do it for more than one year? The only thing more frightening than the idea of needing nursing home or home health care is the prospect of paying for it.

 According to AARP, approximately 60% of people over the age of 65 will require some type of long term care during their lifetime. So what should you do?  Considering what is at stake, it is important to weigh your future risks against the cost of buying a Long Term Care policy.  The earlier you purchase LTC coverage, the less expensive the premiums, but the longer you will pay them. People purchase coverage before they retire.  Those in poor health or over the age of 80 are frequently ineligible for coverage.  Long Term Care coverage can pay for a variety of nursing, social and rehabilitative services at home or away from home for people with a chronic illness, a disability or who just need assistance bathing, eating or dressing. One drawback is that Long Term Care insurance can be costly. However, they can be quite reasonable compared to real-world costs for long term care.  Considering what is at stake, it is important to weigh your future risks against the cost of buying a policy.

 Please feel free to contact us to discuss your situation and what options will work best for you.


Posted by: Patrick Carroll at 9:28 AM
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This material is intended for historical purposes and may be outdated. Its contents should not be relied upon as current information. For more up-to-date information regarding these topics, contact your financial professional.

All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Securities offered through Triad Advisors, member FINRA/SIPC. Advisory Services offered through ACI Partners, LLC. ACI Partners, LLC is not affiliated with Triad Advisors.