Retirement is supposed to be a happy time for everyone…a kind of “thank you” for a life well lived and contributions made through your work efforts. It’s a time to celebrate and to reward yourself with time to do what you want…every single day. It’s a time to reflect and pursue lifelong ambitions that couldn’t be done during a working lifetime. And it’s a time to carve out time to spend with your loved ones, wherever they may be living.
But there are also some harsh realities to retirement…money. The biggest issues most people face is whether or not they will have enough money to live well into their older years while still enjoying life. And one of the key topics to consider is long-term care. What does that look like and how will that be funded by your current retirement plans? These are looming questions for anyone approaching retirement age.
This is a painful topic that may be harder to talk about than death. The prospect of needing long-term care in a facility is a frightening thought. It is filled with so many unknowns, that most people just don’t want to bring it up. However, according to this article from CNBC, “Plan ahead to protect your family and your fortune from this retirement risk,” if you work things out in advance, you can find a way to cover the costs, so it won’t ruin your retirement.
There are some hard facts to consider in making these decisions. For example, in 2018, the national median annual cost of a semiprivate room in a nursing home was $85,775. A home health aide in 2017 cost $49,192. These are significant costs for anyone to bear. The key question is, “how do you prepare for long-term care costs?”
The good news is that many can make plans to help defray these costs and make them workable in their retirement years. But the number one solution to all of this is to START PLANNING NOW…don’t wait another day to get these plans in place. The earlier you start your plan the easier the burden becomes over the years. One area to get started in immediately at a younger age (if possible) is to purchase a long-term care insurance policy. The cost of a policy at a younger age makes it much more likely you’ll be able to afford it. As you get older they get much more expensive, if you can even purchase a policy at all.
A key question to answer for yourself is, “Where would you want to receive care?” If you have a choice, would you rather have someone come to the house for a few hours to help or would you prefer to move to an assisted living facility? Both have costs, but there are more things to consider than costs in making these decisions. Determining which one you’d prefer (if you have a choice) will help significantly in the planning process. While we can’t always know what we will need, at least we can plan toward the one we want if we have a choice.
There are also options for the type of care insurance you can purchase. You can now purchase more than just the traditional long-term care program. There’s also a hybrid cash-value life insurance policy or you can self-insure if you have the cash on hand. These should be investigated with a long-term care specialist to see what options are available to you at your particular stage in life. Your estate planning attorney should be able to guide you through this process and connect you with individuals that are experts in the area of long-term care.
A very important question when it comes to planning for your long-term care, outside of insurance issues, is, “Who will be making your medical decisions?” This is a very important area to have your estate planning attorney put a healthcare directive in place that designates a trusted person who will make decisions about your medical care if you should become unable to do so.
Another very important question that is related to this type of planning is, “Who will make your financial decisions for you as you get older?” Again, your estate planning attorney will be able to create a power of attorney for you. This should be someone you trust, someone good with handling money, and someone who can make decisions, and someone who can take over paying bills and managing your household budget if you can’t.
Both these people may never be called upon to act, but if they are, you and your family will be in much better shape at a very difficult time. It is very important to talk with these people in advance to make sure they are up to the task and willing to handle these areas for you.
If some personal friends or family members aren’t available for these roles, particularly when it comes to the financial power of attorney, a bank or a professional advisor may be a good choice. They have certain reporting requirements and may be a less emotional choice than a family member.
This is an area where your estate planning attorney will, as part of creating your estate plan, help you determine the best path for you and your loved ones. They can help you make the best decisions when selecting these individuals. The key is to get this all done and in place since none of us are guaranteed tomorrow…and tomorrow seems to get here sooner than we might like.