Long Term Care Planning
Appropriate long-term care planning not only helps you prepare for the significant cost of care; it also helps protect your retirement – your future.
Anyone who has cared for a spouse, parent or friend in a long-term care situation knows the distressing effect it can have on a family and an estate.
“70 percent of today’s 65-year-olds will need long-term care (LTC) services in their lifetime; 20 percent will require LTC for five years or more.” (1)
Are you willing to risk your retirement future by hoping you’ll be in the 30% minority?
Although the need for long-term care planning is eminent, we’ve found that many people are simply not aware of how they might best prepare to bear the burden financially. What is your current advisor doing to help you in this area? Are you aware of all your options? We educate our clients as part of our comprehensive, risk-based approach and provide appropriate recommendations based on their individual situation.
What are the ways to protect your future from the cost of long-term care?
Besides relying on government support, of which many are not eligible, there are generally 3 approaches:
- Self-insure
- Traditional, premium-based, long-term care insurance
- Asset-based long-term care strategies
As you consider these approaches, first ask yourself, “Do I want to bear 100% of the potential cost long-term care, which can be financially devastating?” If the answer is ‘No,’ you’ll likely find yourself looking at Options #2 or #3 above, which can be far more efficient.
Traditional long-term care insurance policies (#2) have been around for some time and can be used to shield you from the brunt of long-term care costs. However, they can be very unproductive leaving you exposed to unexpected premium increases and/or potential shortfalls in coverage when you need it most. Also, in the case you don’t need the policy, you can’t always get your money back – thus the phrase “use it or lose it.” An asset-based long-term care strategy (#3) could be far better.
What is Asset-Based Long-Term Care?
Asset-Based Long-Term Care can be a more efficient alternative. It uses whole life insurance and/or annuities to access a death benefit which can be used to cover qualifying long-term care costs. If the death benefit isn’t used up prior to one’s passing, a tax-free distribution can be returned to heirs. There is the potential to provide lifetime coverage. And, these policies can be funded with an existing IRA, 401k, mutual funds, cash, annuity, ongoing premiums or even existing life insurance.
Comments we often get from clients are, “Why didn’t I know about this earlier?” or “This seems too good to be true.” It is a unique strategy that can make a lot of sense for multiple reasons, including the potential for no ongoing premium payments throughout retirement. You’re also able to elect joint protection as opposed to individual protection so both you and a loved one are covered in the future.
Protect your retirement savings from the cost of long-term care.
Not being prepared for healthcare events may have a big impact on your spouse and family members. Your spouse, children or other loved ones tend to carry the burden of providing long-term care for those who aren’t prepared. Caregiving responsibilities may add stress, strain relationships, and/or cause the caregiver to become ill as well. We invite you to learn more regarding the various protection options available to protect your estate from a long-term illness.
Learn 3 tips for choosing long-term care protection by reading a recent post from Mark McKell called “When You’re the ‘One.'”
Appropriate long-term care planning not only helps you prepare for the significant cost of care; it also helps protect your retirement – your future.
To learn more, please contact our office to arrange a complimentary consultation. Simply call (888) 704-1337 or email consult@mckellpartners.com.
Also learn more by attending one of our upcoming educational events.
1 U.S. Department of Health and Human Services. “Who Needs Care?” 24 June 2016.
