As I talk with clients about retirement planning, I find their biggest concern is how much money they could lose in a stock market downturn. But an even bigger threat to the safety of a very carefully accumulated nest egg may surprise you – it’s actually an unexpected health event requiring long-term care. With the average cost of an assisted living facility over $40,000/year and a full-skilled care facility over $70,000/year, it’s a part of retirement planning that cannot be ignored by retirees or their adult children.
Several options exist to pay for long term care:
- Self-insure and rely on family members
Pros: If you never need long-term care, you haven’t spent money on unnecessary premiums.
Cons: It’s difficult to amass enough wealth to fund full-skilled care. A couple’s funds can be depleted providing care for the first spouse, leaving the second spouse with few options. Additionally, many people balk at the idea of their adult children helping them with daily activities of living.
- Rely on the government
Pros: Minimal cost.
Cons: Medicare covers a very short time in full-skilled care only, while Medicaid requires you to be impoverished and gives you little control over the facility in which you will live. Neither covers home health or assisted living.
- Use traditional long term care insurance
Pros: Annual premiums provide insurance benefits for a variety of assisted living and full-skill facilities.
Cons: Premiums can increase over time, and it has the “use it or lose it” stigma of paying for something you may never use.
- Asset-based long term care insurance
Pros: Allows you to reposition a portion of your savings into a type of life policy that provides a multiplied amount of your investment, tax free, if you need long term care. And there is no “use it or lose it” – your investment simply turns into an inheritance for your heirs, or you can even cancel the policy and request your money back.
Cons: Need to have the necessary investment minimum of $35,000 already saved, though 10-year flex pay funding options are available.
As a financial planner, my job is to walk you through the pro’s and con’s of each scenario and decide which one makes sense for your unique circumstances. Get started today – call my office to schedule a complimentary conversation about your health care needs in retirement.
Marsh Professional Group, LLC
1341 Branton Blvd, STE 105
Knoxville, TN 37922
Financial Planning & Investment Advisory Services are offered through Marsh Wealth Management, LLC (“MWM”), an independent investment advisor registered with the state of Tennessee. Yvonne Marsh is an Investment Advisor Representative of MWM in the state of Tennessee. Marsh Professional Group, LLC and MWM are separate legal entities. For a detailed discussion of MWM and their investment advisory fees, see the firm’s Form ADV on file with the SEC at www.adviserinfo.sec.gov.