Avoid financial, emotional pain by planning for long-term care

Adam Cufr

        Before the pandemic began, I made a few house calls. That is, rather than hold meetings in the office, I ventured out into the world to see some people who weren’t able to come see me.
        I visited a woman in her nursing home and a wheelchair-bound gentleman in his home to discuss his financial and care options should he soon enter a nursing home. Aside from some really fantastic conversations, here is what struck me: he’s 78 and she’s just 71. Both are finding themselves in need of full care long before they ever would have dreamed.
        While 60% of people age 65 and over will never need nursing home care, the 40% who do typically wish they had planned for it a lot better. Why? Because for those who do enter a home, the average stay is 2.44 years and the current average cost in Ohio is $81,000 per year. This means that for the 40% of retires who end up needing nursing home care, your average expense is nearly $198,000.
        Statistically, you are less likely to end up needing care than you are to end up not needing it. But, with $198,000 on the line – a two-in-five chance does not leave us feeling very confident either.  How do we plan for something we hope will never happen to us? As a caregiver to someone else, is there something you can do for them?
        Let me use an outside example to show you what I mean. None of us would like to see our home burned down, but we buy insurance in case it does. In the same way, should we be required to buy long-term care insurance to protect against those specific needs?
        Let’s look again at the homeowners example. Other than you, who suffers financially when your home burns down? The bank, whom would like to be repaid for the trust placed in you. That’s why lenders typically require homeowners insurance.
        So, when you need nursing care, other than you, who suffers financially? Typically, a spouse suffers financially as well as children if you’d hoped to leave an inheritance. While long-term care insurance isn’t mandated, it may be wise to consider who is most affected by your need for care when considering how to plan for the costs.
        There are four distinct choices available to deal with long-term care costs:
        • Self pay – Choose to pay for any care needs out of pocket or from your investment assets and/or spend down those assets until Medicaid begins to pick up the tab.
        • Buy traditional long-term care insurance – Purchased as a “dollars-per-day” benefit for a specific period of time, the policy will provide much-needed funds to pay for care after a qualifying period is reached.
        • Link long-term care benefits to a life insurance policy – Specially-designed policies allow you to spend the death benefit during your life for long-term care costs. Any remaining benefits pass to beneficiaries at death.
        • Link long-term care benefits to an income annuity – Certain annuities have a benefit that results in a doubling of the guaranteed annual income available should you qualify for long-term care.  
        Look, I know firsthand that this is a topic that’s not fun to discuss, and it’s not nearly as fun as planning for retirement. But, when I speak with those most affected by medical circumstances beyond their control, I wish I could turn back the clock and help them better prepare for their needs.
        While I wish I could avoid it, it’s the burden I feel that allows me to nudge and nag a bit to ensure that you have asked yourself the tough questions and planned accordingly. Is there something you should be doing to better prepare? Is there something a loved one could be doing as well? It’s a conversation most people aren’t excited to have but it’s one that could avoid a lot of financial and emotional pain if it’s handled well.
        Adam Cufr, RICP®, a Northwood native, is the owner of Fourth Dimension Financial Group, LLC in Perrysburg. He is a retirement planner, a columnist for Retirement Advisor Magazine, and the author of “Off the Record – Secrets to Building a Successful Retirement and a Lasting Legacy.” To learn more, visit www.OffTheRecordRetirement.com.


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