Why should you devise a plan for financing Long Term Care?
The first and most obvious reason is because paying for Long Term Care can be costly. Around 70% of people aged 65 or older will require Long Term Care during their lifetime. The cost of Long Term Care can be absolutely Earth shattering if you haven’t had the foresight to devise and implement a proper Long Term Care Plan.
According to Genworth Financial’s 2014 Cost of Care Study, the Average Cost of Care is as follows:
|Type of Care||Annual Cost|
Source: Genworth Financial. Genworth 2014 Cost of Care Survey: Home Care Providers, Adult Day Health Care Facilities, Assisted Living Facilities and Nursing Homes. 2014. Note: Annual cost for home health aide is based on 44 hours of care per week, multiplied by 52 weeks. Annual costs for adult day health care are based on a daily 6-8 hour rate for 5 days a week, multiplied by 52 weeks.
The average length that someone needs Long Term Care 3.9 years, but this length of time can easily double in the case of Dementia and Alzheimer’s patients. Taking this into account, it is quite feasible to see someone spending $300,000 or even more on Long Term Care before you can say “Nest Egg”. It is vitally important to know where does dollars will come from.
Secondly, because you love your family. The implications of creating a solid Long Term Care Plan are even deeper than money according to Genworth’s “Beyond The Dollars” Survey. The impact of taking care of a an ailing loved one, although most times unintentional, can be devastating to an entire family’s mental, emotional and financial trajectory. Survey participants indicated having their careers, disposable incomes and health (physical and mental) compromised as a result of being the sole caregiver for a loved one.
You wouldn’t want to drive from New York to California without a roadmap, so why travel into The Land of Retirement without a plan for financing Long Term Care? A few important questions to answer as you create a plan are:
- How much of a hit your nest egg can endure?
- Which asset should be used to pay for care first?
- Are there options outside of traditional Long Term Care Insurance that should be part of your plan?
- Who will be responsible for executing the directions that you have put in place?
There are a myriad of options for paying for Long Term Care, the most commonly used options are:
“Self-Insuring” or Paying Out-of-Pocket
- Financial Assistance of Family
- Government Assistance (Medicaid/Medi-Cal)
- Long Term Care Insurance
There are many questions to ask and decisions to make. The only way to be sure which option or options is right for you is to work with someone who specializes in Long Term Care Planning. This person is responsible not only for giving advice, but also to serve as a partner in the process who will do the following:
- Educate you on what your choices are and consequences of those choices,
- Empower you to devise a solid plan; and
- Aid you in implementing your plan.
Long Term Care Planning is an all too often overlooked blind spot in many people’s financial plans. Don’t allow poor preparation to decimate the assets that you’ve worked hard to accumulate and most importantly, don’t allow poor preparation to decimate the family that you’ve worked long and hard to build.
TJ “The Money Mama” King is a Financial Wellness Coach, Speaker and Radio Personality based in Chicago. She specializes in helping clients worldwide maneuver through life’s financial challenges, including planning for Long Term Care. She received her Bachelors Degree in Business Administration from Illinois State University.
Contact “The Money Mama”:
Facebook: TJ “The Money Mama” King
LinkedIn: TJ King “
Stay tuned for part -2 in Dr. Woodson’s January 2015 blog series on protecting your physical, financial, emotional, and spiritual health
Tomorrow: Treating Dementia, Including the Best Treatment: Treat the Caregiver
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