If you’re planning for retirement, you’ve probably heard about long-term care and the need to plan for it. It’s a common need for retirees. In fact, the U.S. Department of Health and Human Services estimates that today’s 65-year-olds have a 70 percent chance of needing long-term care at some point in their lives.1 The average senior will need care for three years.
But what exactly is long-term care? How is it provided? And what kind of health issues cause a need for long-term care? Long-term care is a broad term that applies to a variety of services. It’s difficult to plan for something when you don’t know exactly what it will look like or how much it will cost.
Long-term care is generally defined as extended assistance with basic living activities, like mobility, bathing, eating, household chores and more. It can be provided in the home or in a facility. It’s often caused by cognitive issues like Alzheimer’s but can also be needed as a result of stroke, cancer, heart disease, joint issues and a wide range of other conditions.
You can’t predict what kind of health issues you’ll face in the future, but you can plan for potential costs. Below are three common ways in which long-term care is administered. A financial professional can help you develop a strategy to pay for your future care needs.
For many seniors, long-term care is progressive. It often starts with support for simple tasks like meal preparation, cleaning or running errands. As health issues become more intense, they need more hands-on assistance with things like mobility or bathing.
You may be able to count on a family member or friend for help in the early stages of care. However, family-based care usually doesn’t last forever. At some point, your care needs may progress to a level that is beyond your family’s capability. For instance, you may reach a point where your spouse can no longer transfer you from a bed to a wheelchair. Or you may need round-the-clock support and that may be too much for your family to provide.
While these thoughts aren’t pleasant, they’re a reality for many seniors. According to projections, it’s likely that most seniors will need paid, professional care at some point. Even if your family is able to help, don’t count on that low-cost assistance to meet all your needs.
Even if your needs have progressed beyond what your family can provide, that doesn’t necessarily mean you’ll have to move into a facility. You may be able to stay in your home and get the care you need, especially if you’ve developed a strategy to pay for care.
For example, you could modify your home to accommodate health equipment such as a bed, a wheelchair or even grab bars. You might be able to hire an in-home health aide to provide custodial care and possibly even skilled nursing.
Genworth estimates that a full-time in-home health aide costs an average of $4,195 per month.2 Most long-term care insurance policies cover home care, even if it’s provided by a family member. Many policies also cover home modifications and equipment.
The U.S. Department of Health and Human Services estimates that 35 percent of all seniors spend at least a year in a nursing or assisted living facility at some point.1 You may need skilled nursing as the result of a specific injury or illness. Or you may decide to move into an assisted living facility, so you have full-time support available.
Either way, your facility care is likely to be a costly proposition. Genworth estimates that the average room in an assisted living facility cost $4,000 per month in 2018. A room in a nursing home cost more than $7,000.2
It’s possible that these costs will be covered by Medicare or Medicaid, but that’s not usually the case. Medicare only covers skilled nursing that’s related to a specific hospitalization. Even if you qualify for Medicare, the coverage typically lasts only several months. Medicaid only covers nursing home care if you have few assets and little income. You may want to think about alternatives to Medicare, like long-term care insurance, to pay for your stay in a facility.
Do you have a strategy to pay for long-term care? If not, let’s talk about it. Contact us today at Retirement Peace Project. We can help you develop a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18148 – 2018/10/17
It’s a situation every child fear, but one that is a painful reality for many families. A parent, after spending decades raising a family, building a career and maintaining a home, no longer has the physical or mental ability to care for themselves. They either need care and support in their home, or they need to transition into an assisted living facility.
According to the U.S. Department of Health and Human Services, 70 percent of Americans age 65 and older can expect to use long-term care at some point in their lives. On average, they will need care for three years, although 20 percent of retirees will need it for five years or more.1
If you’ve already started exploring your care options, you know how costly these services can be. In some cases, you may be looking at thousands of dollars per month for several years. If your parent doesn’t have significant assets or long-term care insurance, that could be a tough bill to pay.
At the same time, you may be preparing for retirement, or you could be newly retired. You might not have the resources or financial flexibility to shoulder some of the burden. While you may want to help your parent get the care they need, you also don’t want to sabotage your own plans.
Fortunately, you have options available. Below are three sources to explore as you plan your parent’s long-term care:
There are a variety of government assistance programs you may want to look into. While Medicare is the most prominent, it often doesn’t cover long-term care costs. The exception is if the long-term care is a direct result of a hospitalization. In that case, Medicare may cover costs temporarily, but it usually isn’t a long-term solution.
Medicaid will cover long-term care almost as long as it is needed. The catch, though, is that your parent will have to be nearly destitute before they’re eligible. To qualify for long-term care, you must have a very low level of cash and few other assets.
Finally, if your parent is a veteran, they may qualify for a program known as Aid & Attendance (A&A) from the U.S. Department of Veterans Affairs (VA). The A&A program is designed to help housebound veterans with their care expenses.
The A&A benefit is paid monthly in addition to any existing military pension. The VA uses a complex formula to arrive at the A&A benefit amount, so you’ll want to consult with the agency for more information.
If your parent needs long-term care, you’ll probably start your planning process by evaluating their bank accounts, pension plans, investment accounts and more. Those are all great resources to consider.
However, there may be other assets that are just as helpful. For example, your parent could have old permanent life insurance policies that have been accumulating cash value in the form of dividends or interest for years or even decades. You could tap into that cash value to pay for care.
Also, look at your parent’s physical assets. It may be difficult to part with a treasured car, art collection or even the family home, but if it gets your parent the care they need, it could be worth it. You could also consider a reverse mortgage to tap into the home’s equity without surrendering the house itself.
Family Care Agreements
If you have siblings, you may find that the most efficient way to provide your parent with care and support is to handle it within the family. This could be especially true if your parent needs help only with basic activities like cleaning, dressing and bathing, rather than with medical issues.
In some families there’s one sibling who may have the time, temperament and skills to provide such care. Of course, it also may not be fair for that sibling to shoulder the entire burden. In that case, you may wish to create a family care agreement. That’s a document by which the siblings who aren’t providing care contribute compensation to the sibling who is handling the day-to-day care and support.
While it may be uncomfortable for siblings to pay one another, that kind of arrangement could also make it more feasible for your parent to stay in their home and to get care from someone they know, love and trust. If you opt for this strategy, make sure you create a formal, legal document and spell out every detail.
Ready to develop a long-term care strategy for your parents and yourself? Let’s talk about it. Contact us today at Retirement Peace Project. We can help your family develop and implement a plan. Let’s connect soon and start the conversation.
Thinking of buying long-term care insurance? That could be a smart decision. Long-term care is likely to be a reality for many retirees. The U.S. Department of Health and Human Services estimates that 70 percent of today’s 65-year-olds will need long-term care at some point in their lives.1
Long-term care could deplete your retirement assets. Many people need long-term care for several years. While care can be provided either in a facility or in the home, both types usually cost thousands of dollars per month. That type of cost can quickly add up.
Long-term care insurance can help cover some or all of the cost, depending on your type of policy. You pay premiums today in exchange for protection in the future. Not all policies are the same, though. There are many different types, and each has its own set of costs and benefits.
Many policies also offer optional riders. These are benefits you can add to your policy for an extra charge. The extra benefits may provide unique protection or fill a specific need. Below are three of the most commonly used riders. Before you buy your policy, consider your needs and which riders may best help you meet your objectives.
If you’re married, a spousal benefit rider could be an important feature. Most long-term care policies have lifetime caps on coverage. These are sometimes expressed as a benefit dollar amount, but other policies have a maximum number of months they will cover.
The spousal benefit combines the maximums of each spouse into one pool. That way, either spouse can use the benefit as needed. Some policies will even increase the maximum coverage to accommodate both people. This benefit can increase the cost of the policy, but it can also provide a valuable level of protection.
Return of Premium
One of the biggest concerns many people have about long-term care insurance is the risk that the policy will never be used. Of course, not using the policy means you didn’t need long-term care, so that’s not necessarily a bad thing. However, you may not feel great about paying premiums for years only to never put the policy to use.
Some policies offer return-of-premium riders. These riders vary by policy, but they essentially return a portion of your unused coverage to your beneficiaries upon your death. Some companies will package this benefit as a life insurance hybrid. These riders are appealing, especially for those who want to leave a legacy. However, the rider can also significantly increase the cost of the policy.
This may be one of the most important riders available. Health care costs are rising all the time. Long-term care costs are no exception. It’s possible that you could buy your policy and then not use it for years. Costs could rise over that time, reducing the impact of your coverage. Inflation protection riders increase your benefit each year to keep up with rising costs. The rider may increase your premium, but it may be worth the extra cost.
Ready to find the right long-term care plan for your needs? Let’s talk about it. Contact us today at Retirement Peace Project. We can help you develop the right strategy for your goals and your budget. Let’s connect soon and start the conversation.
Estate planning should be a component of any financial plan. The term generally refers to the distribution and management of one’s assets after a person passes away. While it may not be pleasant to think about your death, it’s an important exercise. You can create a lasting legacy and eliminate needless stress for your loved ones by developing a strategy. Estate plans usually include a will, trust and other planning documents.
Estate planning isn’t just for financial assets, though. You also may want to include guidance and instructions for your digital assets. For example, your email could contain important or sensitive information. Perhaps you have privacy concerns with your social media accounts. Maybe you have photos on a cloud server that would hold sentimental value for your family. You may even have online investment accounts or income streams that your loved ones may need to access.
While the world may have gone digital, much of estate planning law isn’t quite there yet. There aren’t many laws that govern how digital assets and accounts should be handled after someone passes away. While a will, trust and other tools are accepted as legal documents to manage financial assets, it’s unclear how these documents can be used with regard to digital accounts. Below are a few tips on how to navigate the digital afterlife:
Decide on your objectives for your accounts.
It’s always helpful to clarify your wishes and objectives before you take action. Start by listing your important accounts, such as email, social media, photo and file storage, and more. Then think about what should happen to each account after your death.
Would anyone need access to the account for any reason? Would your family need to search your emails or perhaps access a financial account? Are there any assets like photos or messages that hold sentimental value?
Privacy should also be a concern. Is there anything in your email or social media accounts that you wouldn’t want your family members to see? There may be certain information or communications that you don’t want to share with your children or other loved ones.
Research how various platforms handle inactive accounts.
Most digital companies have policies in place on how they handle accounts for deceased customers. Some are very strict and won’t allow access to anyone else without some kind of court order. Others will allow another person to access the account if it’s been inactive for a prolonged period. Some social media companies will keep your page up as a “remembrance page” with limited access to others.
Do some research to see how your primary account platforms operate after a user’s death. They may allow you to designate a backup person to take over your account or access certain information. If they don’t allow that option, you may need to consider alternative strategies.
Create written instructions for your heirs and loved ones.
Theoretically, you could include account management instructions, usernames and passwords in your will or other documents. That may not be a great idea, however, as those documents are often filed as public record. That means anyone could gain access to your accounts.
Instead, consider using a password management tool to store login info, and then simply have your estate executor provide that info to the appropriate person. You could also store a document with digital asset instructions along with your other important documents, such as your insurance policy, will and others.
Ready to review your estate planning strategy? Let’s talk about it. Contact us today at Retirement Peace Project. We can help you analyze your objectives and all your assets, and then develop a plan. Let’s connect soon and start the conversation.
Retirement is a happy milestone, but it can also be a transition that brings difficult issues and challenges. Those challenges can spur tough conversations, especially between spouses. One of the most difficult issues for any couple is facing the prospect of declining health and even death.
It may not be pleasant to think about your own death or your spouse’s death, but it’s a discussion you shouldn’t ignore. It is probable that one of you will outlive the other, perhaps by years or even decades. By discussing death and end-of-life matters in advance, you can ensure financial stability for the surviving spouse.
Below are a few questions to discuss. If you don’t have answers for these questions, it may be time for you and your spouse to discuss them.
What assets, insurance and benefits are available for the surviving spouse?
If you’re like many couples, you and your spouse have accumulated a wide range of assets, benefits, and insurance policies over the years. It’s not uncommon for a retired couple to have employer retirement plans, individual retirement accounts, life insurance policies, pensions and more. The surviving spouse should be aware of all these assets and accounts so he or she can get their financial affairs in order.
Create an inventory of all these assets and accounts. The document should include a title for the asset or policy, the contact information for the firm that manages the asset and an estimate of the asset’s value. You should also include potential income sources, such as Social Security, pension benefits and more.
You probably don’t want your spouse to have to track down accounts and insurance policies in the days, weeks and months following your death. Discuss in advance and create an inventory to help them through this process.
What are your goals for your estate?
Do you and your spouse have an estate plan? Many people believe estate planning is only for the ultra-wealthy, but the truth is that it’s important for anyone who wants to leave a legacy for their loved ones.
Review your current planning documents, including wills, trusts and more. Has anything changed with your situation that would impact your estate and how it is distributed? Are there new children or grandchildren in the family who aren’t included in your current plan? Has the value of your assets increased, making it possible for you to leave more to your loved ones than you had originally anticipated?
You may want to consult with an estate planning professional. They can discuss your goals and objectives with you and then examine your current documents. If needed, they can help you revise or create new documents that better reflect your wishes.
Do you or your spouse have specific end-of-life wishes?
It’s possible that you or your spouse could spend the final days, weeks or months in a hospital or other health care facility. If you or your spouse develop a cognitive issue like Alzheimer’s, you could spend much of your final years in a state of incapacitation, a condition in which you are not able to communicate your own decisions and desires.
Now may be the time to discuss end-of-life care with your spouse. That way, both of you will fully understand the other’s wishes. You will then be able to make more informed decisions regarding each other’s health care should one of you become unable to make those decisions yourself.
Are you and your spouse ready to answer these tough questions? If so, let’s talk about it. We can help facilitate this conversation, and then help you and your spouse become better prepared. Let’s connect soon.
According to a recent study from InsuranceQuotes, nearly 40 percent of those surveyed don’t have life insurance protection. Among those without insurance, more than half said they don’t feel like they need it.1 However, even those with insurance may not have the correct amount.
Life insurance is a critical financial tool because it protects your loved ones from financial risk associated with your death. Many people use life insurance to cover final expenses, to pay off debt or simply to provide financial relief during a difficult time.
If you don’t have life insurance protection, or if you haven’t reviewed your coverage in a long time, now may be the time to do so. If you have insufficient coverage, your family members could face a significant financial burden if you pass away unexpectedly.
Not sure how much coverage you need? Below are a few items to consider. You also may want to meet with a financial professional to help you develop a life insurance protection strategy specifically for your needs and goals.
What expenses and challenges will your loved ones face after you pass away?
Although you can use it to accumulate cash value or to fund other objectives, life insurance is usually implemented as a protection vehicle. It provides a tax-free lump-sum amount to your beneficiaries after you pass away. They can use that benefit to cover whatever expenses or financial challenges they may face after your death.
Think about costs that may arise if you were to unexpectedly pass away. There may be final expenses, medical bills and more. If you’re the primary breadwinner in the household, your family may struggle without your income. Consider providing enough life insurance to help them through a transitional period. Some people also earmark enough life insurance to pay off debt, mortgages and other bills.
What legacy do you want to leave?
You may want to use your life insurance policy to help your family accomplish their biggest goals. For instance, maybe you’d like to provide enough funding for your children’s education. Perhaps you want to leave enough money so your spouse can retire comfortably. Maybe you want to leave assets for other important loved ones, such as siblings or parents.
Life insurance can be a great tool to help you leave a lasting and impactful legacy. As you determine your death benefit, be sure to consider ways in which you can help your loved ones improve their financial future.
Are there any contributions you made to the family that will need to be replaced?
Life insurance isn’t just for the breadwinner of the family. Even if you earn less than your spouse or don’t earn income from an outside job, you still may need life insurance protection. You probably contribute to the household in other ways. For instance, you may care for children or manage the home.
If you pass away, your surviving spouse may need to hire someone to replace your contributions. Child care can be costly, as can home maintenance and other similar services. Estimate the replacement cost of your contributions and use that as a basis for determining your life insurance amount.
Ready to implement your life insurance protection strategy? Let’s talk about it. Contact us today at Retirement Peace Project. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
17600 – 2018/4/19
According to the 2017 Insurance Barometer Study by Life Happens, only 60 percent of respondents agreed that single parents of young children need life insurance. On the other hand, 82 percent of respondents said married couples with young children need life insurance protection.1
Single parents often may be in greater need of life insurance protection than couples are. That’s because a single parent could be the primary or even sole provider for the child. If you pass away, there may be no one to support your child from a financial perspective. Even if the other parent or family members will take your child in, they may not have the financial means to provide adequate care.
Life insurance solves that problem. The death benefit can be used to provide sufficient care for your child and to provide him or her with financial security. Your financial professional can help you determine the correct amount and type of life insurance for your needs. In the meantime, below are a few tips to get you started:
Base your coverage amount on your specific needs.
Many people base their life insurance protection amount on a simple formula, such as a multiple of their earnings. However, the better approach is to calculate your coverage based on your specific needs. Think about how your benefit would be used, and then estimate an amount needed to fund those goals.
For example, you may want to leave an amount to fund your child’s education. You might want to leave enough money to cover a certain number of years’ worth of expenses for the child’s guardian. Perhaps you want to leave a lump sum for your child to use when they become an adult. Again, your financial professional can help you identify and clarify these priorities so you can get the right coverage for your situation.
Consider making a trust the beneficiary.
At first glance, it may seem like your child should be the beneficiary on your policy. After all, the coverage is for his or her benefit. However, you may not want to leave the money directly to your child, especially if he or she is very young.
Many life insurance companies won’t pay out a death benefit directly to a child. That means the money would instead go to the child’s guardian, who may or may not use it for their benefit. Instead, consider establishing a trust for your child and then making the trust the beneficiary of the life insurance. Your trust’s executor would manage the funds to make sure they’re used as you intended.
Don’t ignore permanent insurance.
Term insurance is popular among parents because it’s relatively inexpensive compared with permanent alternatives. It’s possible that term insurance could be the right solution for you. However, you may also want to consider permanent policies.
Most permanent policies have a cash value component that allows some of your premium dollars to accumulate on a tax-advantaged basis. Later in life, after your child is grown, you can possibly tap into those accumulated funds to cover retirement expenses or other financial goals. Work with your financial professional to explore all your options and see what fits in your budget.
Ready to develop your life insurance protection strategy? Let’s talk about it. Contact us today at Retirement Peace Project. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
17600 – 2018/4/19