Long-Term Care Solutions

With people living longer than ever…

You have likely seen the statistics that talk about the risk of needing long-term care as you age.  And like most, you’ve told yourself “It will never happen to me”. You may very well be right. But what if you’re not?

Rather than focus on the risk of an event happening to you, take a moment to consider the consequences that providing care over an extended period of years would have on the emotional, physical and financial wellbeing of those you have promised to take care of.

Put simply, if you ever need long-term care, your life is not going to end. Someone else’s life is going to end.

Long-term care doesn’t happen to you. It happens to people you love.

When asked, many think long-term care is about nursing homes. The reality is that long-term care is not a place, but a full-scale response to an event or condition. It describes the care you need if you become incapacitated, either physically or cognitively, due to a degenerative disease or incident such as Parkinson’s, stroke, diabetes or Alzheimer’s. By definition, these conditions severely compromise your ability to get through the most basic of daily routines. In reality, the need for long-term care is a safety issue that requires 24 hour a day attention.

Since you are no longer safe, those you love are forced to re-orient their lives to make sure that you are. This change can have a devastating impact on their emotional and physical wellbeing. You may not want your spouse or children to set aside their lives, but respectfully, what choice would they have?

Long-term care can also be ruinous to the best thought out retirement plan.

Many people believe that a federal program such as Medicare or Medicaid or the VA, if they are veterans, will pay for their care. These programs primarily cover medical procedures or rehabilitative care.

Long-term care requires custodial care, which is defined as the assistance or supervision that a person who is physically or cognitively impaired needs in order to get through the day. With few exceptions, no federal or state program will pay for custodial assistance over an extended period of years. The family therefore is forced to pay out of pocket.
Even so, I still think I have enough assets to pay for care.

The problem with relying on your retirement portfolio to pay for care is that it likely has already been committed to something very important; generating income to support your family’s lifestyle.

If you have to reallocate your retirement assets to pay for care, you reduce the amount of income they generate. It can also cause other consequences such as:

Taxes    What would it cost to sell your qualified funds or low cost based investments?
Market Conditions   What if your investments needed to be sold in a down market?
Liquidity   Could you sell your assets, and if so, would you incur a loss?

If your illness or condition lasted long enough, it could threaten the financial viability of your surviving spouse and children who may depend on an inheritance.

It’s beginning to make sense…
But what if I don’t need to care?

You may not. But, do you begin to see how your family and retirement portfolio would be affected, if you ever did? That’s why it’s important to start thinking about a plan.

The Value of a Plan

No one can guarantee that you won’t need care. But you can create a plan that will help protect the wellbeing of your spouse and children if you ever do. The plan has two goals:

First, to preserve your family members’ emotional and physical wellbeing by allowing them to hire professionals to provide care;
Second, to preserve your retirement portfolio.

Funding your plan

Once your plan is in place you need a source of funding to pay for it. Long-term care insurance can be an effective solution. Implemented correctly it provides a stream of income that pays for professionals to help keep you at home and/or residential alternatives such as assisted living facilities or nursing homes.    

This allows….

Your family to supervise rather than provide care, therefore helping to protect their emotional and physical wellbeing.
Your retirement income to continue funding your lifestyle, therefore allowing you to help keep your financial promises;
You to help preserve the financial viability of a surviving spouse or children who may need an inheritance.