Are You Fully Prepared For Your Golden Years?

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Two Important Long-Term Care Considerations by D. Corey Rieck, MBA, CLTC

What would be the impact of a prolonged period of health-related struggles on your family, income, personal assets, and investments? You cannot fully assess the impact unless you understand the costs of long-term care.

An unfunded or underfunded long-term care event can do irreparable harm to your family’s plans, investment performance, current and future income, and overall financial plan going forward. There also is the emotional, mental and physical stress that long-term care can put on family relationships. Without a plan, long-term care is almost always provided by a person’s family.

What is long-term care?

Put simply, long-term care can be required because of a prolonged illness or disability. It also can include caring for a family member who needs help or support because they are living a long life.

The need for long-term care can be triggered at any stage of life by an accident, stroke, disease, or the onset of Alzheimer’s. Examples include a grandmother with dementia or a parent with multiple sclerosis.

More specifically, long-term care is required when a person needs help with two or more of these six activities of daily living (ADLs):

1. Bathing – The ability to wash oneself and perform personal grooming (i.e. shaving, brushing teeth).

2. Dressing – The ability to dress oneself, including buttoning and zipping as needed.

3. Eating – The ability to feed oneself.

4. Transferring – The ability to either walk or physically transfer oneself from a bed to a wheelchair and back again.

5. Toileting – The ability to get on and off the toilet.

6. Continence – The ability to control one’s bladder and bowel functions.

Or, long-term care can be required when a loved one needs help because of cognitive impairment. For example, a person needs daily help when they struggle with one or more of the following:

1. Orientation as to person, place or time.

2. Issues with abstract or deductive reasoning.

3. Judgment as it relates to safety awareness.

4. Frequent or complete loss of memory.

Why consider long-term care planning?

The financial cost of long-term care will impact your other financial plans. Long-term care can cost more than $250 per day in cities like Atlanta in the United States today. That is $7,500 per month and $90,000 annually, of which your health insurance will cover little to none. Long-term care costs vary by service and the city and state where you are receiving care. These costs can increase 3-5 percent annually. The ongoing cumulative costs can be even more significant. If long-term care expenses are unfunded, they quickly undermine a financial plan and can negatively impact retirement planning.

Why consider long-term care insurance?

Your health insurance or Medicare will not pay for long-term care expenses. Private health insurance or Medicare only covers expenses to cure a person using skilled care delivered by a licensed medical professional. Examples of skilled care can include tube feeding and physical therapy. Long-term care expenses incur when a person needs assistance with the activities of daily living or cognitive impairment. Long-term care is not provided by licensed medical professionals, home health aides, or personal care attendants.

This distinction between skilled and non-skilled care is critical. Consider your health insurance and long-term care insurance as book ends. One helps you with skilled care when there is an expectation of you getting better. The other helps you when there is no expectation of improvement using unskilled care.

Here are the next steps you need to take:

  • Sit down with a long-term care planning professional to educate yourself further.
  • Learn the costs for long-term care in the city and state where you currently reside. * Identify your ideal retirement location and learn the costs of long-term care in that city and state. * Work with a long-term care planning expert who has access to multiple insurance carriers and coverage options to provide you the best recommendations based on your individual health and preference of long-term care.