WHO’S GOING TO CARE FOR YOU?
ARI BAUM, CFP®
IF YOU’VE EVER SEEN A LOVED ONE LOSE HIS OR HER CAPACITY FOR LIVING INDEPENDENTLY, YOU KNOW HOW DIFFICULT IT IS FOR THE WHOLE FAMILY. BECOMING IMPAIRED OFTEN STARTS WITH UNEXPECTED CHALLENGES.
All too often, struggles with the normal activities of daily living are accompanied by the loss of dignity and rapid depletion of savings. You need assistance but might not want members of your family to handle more delicate tasks.
Here’s the hard truth: hiring help for your “long-term care” is not covered by Medicare, nor by most employer or retiree health plans.
Help does not come cheap, especially when it’s all out-of-pocket. Many folks prefer to stay in their home for as long as possible. Whether you’re cared for at a facility or at home, the expenses add up.
If you’ve helped a relative through this process, you probably want to avoid the stress and loss of dignity that come with having your spouse and kids (or others) make decisions for you. Planning ahead will help you maintain your dignity and independence.
SENSITIVE TRUTH #1
We’re all at risk of losing our future independence.
Your genetics could get in the way of the life you want in your upcoming years. Preparing a roadmap now, to provide for necessary care later, will help you feel less anxious about the risks. It will also help you navigate sensitive situations in the future.
Even if your family has no history of illness, the natural aging process causes all of us to lose our independence eventually. It’s not a matter of if it will happen, but when.
SENSITIVE TRUTH #2
Unforeseen expenses in your later years could empty your wallet.
Even with government programs such as Social Security and Medicare, the costs of living as an elder adult can come on suddenly and all at once. In fact, nearly a quarter of Medicare costs are spent in the last year of life. For example, the cost of a nursing home can exceed $90,000 per year — and could be much higher depending on where you get care.
What are the expenses? Even if you plan to remain in your home to avoid the high costs of a care community, you’ll need to prepare your home for aging in place. This could mean renovations, such as:
- Widening doorways
- Installing wheelchair ramps
- Adding walk-in bathtubs
- Remodelling the bathroom
- Putting in non-slip flooring
Home help comes with a hefty price tag. The cost of a home health aide is about $52,600 annually for 44 hours a week of help. Plus, you may suddenly find yourself needing more care that, which can only be addressed by moving into a nursing home or an assisted living community. The cost of memory care, should you need it, adds an additional layer of expenses.
Any of these expenses will significantly raise your cost of living and threaten your long-term financial security.
SENSITIVE TRUTH #3
Living independently tomorrow requires preparation today.
Most people want to live independently for as long as possible, including staying in their homes. Right now, especially if you’re watching self-sufficiency slip away from a loved one, you may be worried about what will happen to you when the time comes.
If you need care, who will provide it? If you have children, they’re a potential resource. That’s assuming that they live close enough to you, they don’t have to disrupt their standards of living, and they’re willing and able to take over these responsibilities.
On the other hand, you might not want your children to bathe you, as you bathed them when they were little. Or you might not have children or other relatives who can help. In these situations, you’ll need to hire someone.
Knowing what you want for your later years is key in making these decisions. Designing your roadmap for eldercare now will help you make cost-effective choices you might not be able to access later.
SENSITIVE TRUTH #4
The opportunities you have today may not be available tomorrow.
When it comes to paying for long-term care, a number of options are available to those who are currently healthy. But you may not be eligible for them past a certain age, or once certain illnesses have occurred.
One common choice for covering care costs is to self-insure or pay the expenses out of pocket. The risk is that you will run out of money or hurt your spouse’s lifestyle. It’s sadly common for children to receive diminished legacies or none at all, because the money was spent on the parent’s care.
An alternative to that is to buy a traditional long-term care insurance (LTCI) policy. It’s specifically designed to cover just your long-term care needs.
Another option is to buy what’s called an asset-based policy, typically a life insurance or annuity contract with a long-term care rider. Each insurance company structures them somewhat differently. In general, though, the amount paid for your long-term care is subtracted from the benefit you would otherwise receive from the contract.
Bottom line: you’ve got options, especially if you start planning early. Don’t wait to set your course for self-sufficiency in your senior years. It’s crucial to develop a strategy now that can be implemented quickly when needed. You already know what kind of independent lifestyle you want when you age, but you may not understand how to pay for it without draining your wealth.
Ari Baum, CFP® is the founder and CEO of Endurance Wealth Partners, with over 25 years of experience in the Financial Services industry. He brings his in-depth experience to Conceive. Believe. Achieve. for his clients.
Securities and Advisory services offered through Prospera Financial Services Inc. Member FINRA/SIPC.Brokerage and Advisory accounts carried by Wells Fargo Clearing Services, LLC.
