One conversation that comes up with clients who are near retirement age is Long Term Care (LTC). Most people always worry about saving enough for retirement but LTC is an important key aspect to ensure you do have enough for retirement. At younger ages, people are more worried about accidental deaths (aka term life insurance) or setting enough aside to put into retirement accounts.
But once you are close to the retirement age and have done all your saving, there needs to be a change in the mindset. It is no longer save and grow. It is protect and prolong the assets life to keep throwing off that money to pay for your daily needs.
Roughly 2/3s of bankruptcies are caused by medical bills, while not all of it is attributed to LTC, it is an indication of the severity and the lack of planning by most families. With term life insurance, the majority of people never use it or receive a benefit from it, but with LTC, over 2/3s of the people who purchase a policy will end up needing it. That is an extremely high probability.
Face it, there comes a time when you get to an age where you may need help getting changed, walking around, showering, eating, etc…, and there are 2 primary ways of dealing with it.
- You hope your spouse or children are able to wait on you hand and foot. While this would be a great show of devotion, most parents would not like to put such a burden on their children or spouse.
- You pay someone to help take care of you. Either at home or in a nursing home. Keep in mind a good nursing home runs anywhere from 60k-80k a year if you want to live decently.
With that said, LTC is a good way to protect your assets and to avoid putting a large burden on your family. Not to mention the mental aspect of it. Most people would prefer their loved ones not see them in such a dependent/infirmed state. With LTC, the skilled care helps provide you a modicum of independence and respect.
LTC policies are expensive, but not compared to the costs of providing skilled care to someone who is unable to live by themselves. A monthly premium from 200-400, is much preferable to paying out 60,000-80,000 a year for nursing home care.