It Can Save a lot of Money & Heartache Later.
Years ago the number one fear in America was public speaking followed by death. Today with over 12,000 baby boomers retiring on a daily basis, one of the biggest causes of anxiety is the fear of outliving one’s retirement income. Sadly, the escalating costs associated with long-term care, during retirement, can make this an unfortunate reality for many.
Every one of us hopes to live to a ripe old age, enjoying good health, family and friends along the way. The luckiest of us will. But those who are less lucky may have to deal with serious and often on-going health challenges that come with longevity. It is unsettling to consider the possibility of needing daily assistance with the most basic daily activities such as eating and bathing. Yet statistics indicate that most of us will need some sort of help in our latter years of life. Planning for those potential needs now can save a lot of money and heartache later.
A huge wave of baby boomers will need long-term care in their golden years. For a couple turning 65, there is a 75 percent chance that one of them will need long-term and yet fewer than half have taken steps to prepare for it.¹ The cost of long-term care is the big health insurance uncertainty for Americans 65 and older. How will they pay for long-term care? Most Americans are grossly underfunded for their retirement and do not have enough in general savings. The average cost of a nursing home ranges from $85,000 to $120,000 a year, while hiring an aide to spend six hours a day on average in the home starts around $40,000 a year.²
Many wrongly believe that savings and government programs, such as Medicare and Medicaid, will easily cover the tab if needed. The biggest shock for people entering the Medicare system is learning that it won’t pay for custodial care in a nursing home. Medicare was designed to pay for acute illnesses and medical treatments. It won’t pay for someone to feed you or help you bathe or dress. If you were to slip on the ice in your years of retirement and need a hip replacement, Medicare will take care of this procedure. Now visualize a different scenario. If you were to start suffering from dementia and you forgot to turn off the stove and you almost burn down your house, or you can’t bathe yourself anymore, you are not covered! Unless you have someone to care for you, you go into an assisted living facility, at about $70,000 a year, and pay for it yourself. Only when you spend all but your last few thousand do you qualify for Medicaid, which will then pay the nursing home bills.
The rules are very complex. For example, you can give away money to your spouse or children to become poor enough to go on Medicaid, but you have to get rid of it five years before you enter a nursing home. This is the reason why most long-term care is provided by family members and there are 52 million Americans who are unpaid caregivers. Many people underestimate the need and cost of long-term care.
I find that many people are in denial or believe their children will look after them. In many cases, especially here in Central Oregon, family members may not live near you or have the means to support you. Even if they do, most of us would rather not be a burden to our loved ones. To protect yourself, your family and your assets, long-term care insurance is available. This coverage may allow you to remain financially independent, free from worries about extended medical care and free from relying on your family members for care or money. Long-term care insurance will provide you and your family with peace of mind before and after needing such care. It also works to:
• Protect your assets and preserve an estate for your heirs.
• Enable you to provide yourself or your spouse with the best quality medical care.
• Help you preserve your financial and individual independence. It is important to keep in mind that coverage is about preserving independence – not losing it.
Unfortunately, many do not think about this insurance until they need it. To learn more about long-term care insurance and how it can secure your financial future, contact your financial advisor.
¹ Oregon LTC Buyer’s Guide
² American Academy of Actuaries.
David Rosell is President of the Rosell Wealth Management in Bend. He is the Past President of the City Club of Central Oregon and a Past Chairman of the Bend Chamber of Commerce. David can be reached at (541)385-8831 or our brand new web site: www.RosellWealthManagement.com.
Investment advisory services offered through Rosell Wealth Management, a State Registered Investment Advisor. Securities offered through ValMark Securities, Inc. Member FINRA, SIPC 130 Springside Drive, Ste 300 Akron, Ohio 44333-2431. 800 765-5201. Rosell Wealth Management is a separate entity from ValMark Securities, Inc.
