long term care planning, retirement planning, long term care insurance

Long-term care is never something people are eager to think about.

Discussing the potential of requiring long-term care means discussing the potential of one’s own failing health.

Yet, over half of all Americans are expected to need some form of long term care in their lifetime.

Planning for long term care needs early is much easier than scrambling to find suitable care when the need actually arises. Not only can the stress be great on those needing long term care, it can be very difficult on their family members.

In the United States, the average annual cost of a private long-term care room is nearly $100,000. In some areas, the cost can creep even higher beyond $130,000 per year. This is not a small expense that most people are able to cover with no planning.

In this article, we will look at some of the common ways people plan for long-term care and what you can do to ensure you are ready if the need arises.

Start Saving Money Now

One of the most common ways people pay for long term care needs is from their own savings.

People who have saved throughout their lifetime for retirement and practiced smart investment withdrawal strategies can rely on their savings to last into their later years.

When many people begin retirement planning, they rarely imagine long term care planning will be a part of their journey. Instead, people dream of traveling, enjoying their free time, and spending time with family.

However, retirement plans will change as people age.

Over half of people will require long term care and this number may only increase as better medical care further extends the average person’s life span.

Saving now will help ensure your retirement can be as stress free as possible. If you are fortunate enough not to require long term care, you will have funds left to provide to family or donate to charity if you wish.

Rely on Medicare or Medicaid

Many people do not consider long term care planning because they assume that Medicare and/or Medicaid will cover their expenses once they arise. The truth, however, is not so simple.

Medicare and Medicaid can help with long term care expenses but there are rules and limitations to the coverage you may be eligible for.

For example, Medicare will not cover assisted living but, instead, it covers medically necessary care like skilled nursing facilities. This could be a major shock when you begin searching for long term care.

Medicaid is designed for low income individuals. If you have been saving throughout life and drawing on your savings in retirement there is a possibility that you will not be eligible for Medicaid. Of course, there are strategies that some use to qualify for this assistance but it requires planning in advance of the actual need as Medicaid will assess 5 years of your financial history.

Even if you do manage to qualify for both Medicare and Medicaid, the costs of your long term care may not be entirely covered. You would either need to opt for shared facilities instead of private facilities or consult family members for financial assistance. Neither option is ideal for most.

While Medicare and Medicaid are there to help, they should not be the only solution you rely on when long term care planning. Rather, these options are simply one tool in the tool box.

Purchase Long-Term Care Insurance

As you go through the long term care planning process you may find that your savings simply will not be able to cover the type of long term care you would want to receive.

The good news is that there is still hope.

Long term care insurance is just like any other type of insurance.

You pay regular premiums for coverage in the event that you require long term care. This coverage can help ensure you do not need to rely on financial assistance from loved ones as you enter a long term care facility.

There are a variety of long term care insurance options with varying costs associated. Some plans allow for greater flexibility than others. Before signing a long term care insurance agreement, you need to consider what your needs and wants will be should you enter long term care.

The difficult part of long term care planning is predicting why the need will arise. Many of us cannot know why, when, or even if we will require long term care.

However, we can predict what kind of a lifestyle we would want should the need arise.

Do you hope to receive long term care coverage in your own home or would you be more interested in receiving care at a specialized facility? These are the types of questions you will have to answer when choosing a long term care insurance policy.

In addition, you need to ensure that the premiums of the policy still fit within your budget after retirement. Premiums may increase over time and you need to be able to afford premiums to ensure that you will receive the coverage when you need it.

Purchasing unaffordable coverage will only cause unnecessary stress on your finances.

Find the Right Solution for You

Long term care planning should be considered on a case by case basis. There is no answer on how to prepare for long term care that can simply be applied to all people.

At Mooney Lyons, we can help families with long term care planning as part of their greater financial plan.

We use all of the available options for long term care planning to ensure you can rest easy knowing that you and your family will be looked after in the event that you require long term care.

If you are thinking about your future and the needs that may come up as you age then contact one of our retirement planning experts to discuss your unique situation.