Here’s what you are up against:
Retirement expenses have sky-rocket to levels that are nearly impossible for many Americans to afford without any help. Comfortable retirement now appears to be a luxury that only the ultra rich can afford with ease. In fact, reports show that you would need $350,000 just to cover health care costs alone—and this figure does not take into account long term care costs.
As you may know, long term care services have every capability to break your bank account. A year-long stay in a nursing home could mean an average of $92,378 down the drain. And remember: the rates could go even higher depending on where you live. On top of that, older Americans, regardless if you are male or female, typically need more than a year of this type of care.
This is why long term care strategies play a significant role in your retirement, whether you choose to act on it now or later.
Another unfortunate reality, however, is this:
Many Americans opt for later instead of now when it comes to strategizing for long term care.
Even though the consequences of having no plans are happening in their surroundings (e.g., the overstressed family caregivers and the elderly who have outlived their savings), many baby boomers who still have time to plan don’t, well, plan.
Why is that the case?
Dealing with the Misconceptions about Long-Term Care
Did you know that 4 out of 10 Americans age 40 and older still think that Medicare will pay for their long term care costs?
This leads them to be less aggressive when it comes to having long term care strategies. In fact, one-third of these individuals have confessed that they have not done any plans for their future long term care needs.
This creates a false sense of security that could rapidly turn into every baby boomer’s nightmare: outliving their savings and assets trying to fund for long term care.
Moreover, some baby boomers still think that the best plan for long term care is their children. Many still assume that their adult kids will take care of them as they grow older, and they may be right.
However, it is important to realize the consequences of transferring the burden to your children.
Over the years, more and more adult kids have been joining the ranks of family caregivers—the stressed and somewhat fulfilled group of individuals assigned with the well-being of their older loved ones.
Caregiving does have its benefits—a sense of fulfillment, a way to give back, and an opportunity to mend broken bridges. However, the disadvantages are substantial.
These individuals may face financial problems, challenges in their employment situation, physical strain, mental health issues, and so much more. We even talked about how senior care can affect marriage in one of our posts. One thing is for certain:
Caregiving is no joke, and you may want to think twice before relying on your children for the support.
Read: Long Term Care Facts and Statistics
Planning for Long Term Care: Step Up Your Game Plan Now
This brings us now to one question:
“How do I plan for long term care?”
Truth be told, there is no set way or strict guidelines that detail how you should plan for your long term care. This is simply because your unique needs, circumstances, and preferences play a substantial role in planning. This means that your long term care plans must also be uniquely catered to fit your requirements.
However, this does not mean that guides and tips are not helpful. For starters, these can show you where to begin.
With all of these bits of information in mind, here are few long term care strategies you might want to consider including in your long term care plans:
Long Term Care Insurance Coverage
“Long term care insurance is expensive. I might not even need it!”
This is often the cry of many baby boomers when they think of finding coverage. However, stop, and consider this:
Reports show that 90% of long term care insurance policyholders have shared that they are “satisfied” with the coverage that their policies provide. On top of that, 89% of these individuals stated that they did not need to purchase additional services that their policies did not provide.
This means one thing: long term care insurance policies provide comprehensive coverage that specifically targets the policyholder’s needs.
Moreover, this means that these individuals are able to live their retirement worry- and stress-free. Isn’t that what many of us long for at this point?
So before you dismiss long term care insurance policies, take the time to understand how it works and what it does. For starters, policyholders can potentially have access to long term care benefits that exceed the amount of premiums they pay.
For example, if you pay $1,593 in premiums for the first year, you can potentially gain access services amounting to $216,000.
In other words, you can get more than what you pay for.
To learn more about these policies, please get in touch by requesting for free long-term care insurance quotes. This will help you get an overview of the costs you might face as well as connect you with one of our insurance specialists.
Read: Should I Get Long Term Care Insurance? [Infographic]
Choose Long Term Care Insurance Riders Wisely
We touched on this earlier, but allow us to reiterate:
A successful long term care plan is when it is uniquely catered to cover your needs. And to achieve this, you need to be as engaged and involved as possible in the planning process. You need to be able to communicate your preferences and needs as well as make wise decisions about which goes in your policy plans and which ones do not make the cut.
To be able to do this, however, you need to have a good idea of the features you can include in your policies.
Let’s take a look at three insurance riders you might want to include in your policy:
| Types of Riders | Definitions |
|---|---|
| Inflation Protection | This rider is perhaps the most important feature you can include in your policy. What it does is that it helps your policy keep up with the rising costs. After all, the $150 daily benefit you buy today will not be enough to cover future costs. |
| Shared Care | Instead of buying two individuals policies and limiting yourselves to the coverage of each, you and your spouse can opt for Shared Care. This rider allows couples to be riders in each other’s policies. Instead of being limited to 5-year policies, you can potentially access 10 years of coverage through this feature. |
| Cash Benefit | This rider is largely beneficial to those who receive care from family caregivers because it does not require the policyholders to submit bills. This means that he or she can use the money to pay for the services of family caregivers—an option not available to those with standard policies. |
If you wish to learn more about planning, please take our long term care quiz. Through a series of questions, this long term care planning tool will help direct you to resource materials that will help you build a stronger long term care plan.
Be Wary of Hybrid Policies
Because of the growing need for long term care coverage, other industries have also looked into providing alternative solutions. One such solution is life insurance with a long term care rider.
Over the years, this option has gained attention. However, the question is this:
How effective are these hybrid policies?
The growing popularity of this type of coverage stems from one aspect: its offer to provide the best of both worlds.
While it may provide other individuals the coverage that they want, take the time to understand the policies before jumping on the bandwagon.
Yes, these policies help you fund long term care costs and leave the rest you did not use to your heirs when you die. However, these insurance plans offer less flexibility that long term care insurance.
An example of this is that hybrid policies may only be able to cover 60% to 75% of assisted living costs. Moreover, some insurance plans exclude common mental and nervous conditions.
While this option may be cost-effective, the coverage it provides may not be right for every individual.
Baby Boomers Need to Know that…
The risk of needing long term care is much too high to ignore at this point.
A study points out that 52% of Americans turning 65 today will need long term services and supports because of serious disabilities and health conditions. Without enough preparation, they could lose thousands of dollars in one swoop.
Ideally, every baby boomer must have a plan locked in by now. However, we understand why this is simply not the case.
Building long term care strategies on your own is a difficult process to handle on your own—so don’t tackle it alone.
If you need help finding your way around the long term care industry, then feel free to reach out to ALTCP. Let’s work together in creating the safety net that you deserve.