Planning for the unexpected can sometimes be a daunting and
difficult task, especially if it means setting money aside while
saving for retirement, college education, travel, etc., all at the
same time.
By Eric Heckman
Planning for the unexpected can sometimes be a daunting and difficult task, especially if it means setting money aside while saving for retirement, college education, travel, etc., all at the same time.
There is one area many people often overlook when preparing for retirement and that is long-term care. Omitting long-term care insurance from your overall retirement plan could have significant consequences on your savings and lifestyle.
Long-term care includes a wide range of medical and support services for people requiring assistance with normal daily activities (getting out of bed, taking a shower, getting dressed, preparing meals, cleaning up, etc.)
As the population of older Americans increases, so will the demand for long-term care. Facilities will then command higher prices. According to the American Council of Life Insurers, managed care averages $55,000 a year today and will rise to $200,000 per year by 2030. Home care is also expensive. Having an aide come even every other day for four hours can cost as much as $2,000 a month.
So what can you do to ensure you’ll be financially prepared for unexpected long-term care costs? For starters, read the following common mistakes people make so you don’t do the same.
Mistake 1: Assuming you don’t need long-term care insurance
Many people decide against this insurance, assuming it only covers nursing home costs and that they will never need that type of coverage. Long-term care insurance actually covers numerous services that could be required by anyone.
Mistake 2: Believing Medicare and Medicaid cover all long-term care expenses
While this is partially true, both Medicare and Medicaid have particular rules and restrictions when dealing with long-term care. Medicare provides limited coverage and patients may end up paying out-of-pocket, while Medicaid is considered a “last resort” to cover costs since it requires a majority of the person’s assets to be depleted before benefits are extended.
Mistake 3: Delaying the purchase of long-term care insurance
The thought of needing long-term care can be unpleasant, but many people put off purchasing it because they are in good health. Many don’t realize this is when you should start thinking about a policy – your health is a determining factor in securing affordable insurance.
Mistake 4: Choosing the wrong policy
Once you decide long-term care insurance is a good idea, finding the right provider can be tough. A few things to look for in your policy: financial strength, daily benefit, inflation protection, comprehensive coverage and stable premiums.
Mistake 5: Assuming there are better investments than long-term care
It’s impossible to consider long-term care insurance an investment. Instead, people purchase insurance so if they need to cover an unforeseen financial loss, their risk is covered.
So, do you really need long-term care insurance? There are many different sides to the debate, but considering the significant effect the costs of long-term care could have on your retirement nest egg, you should consult with your financial professional. Including it as part of your retirement strategy could save you and your family a lot of money and stress in the long run.
Contact Eric at www.WealthCreator.com or 297-9800.
