By 2033, more than 11 million middle-income seniors aged 75 and over could no longer afford to live with care or be ineligible for Medicaid to pay for long-term care.
These findings, published in August by NORC researchers at the University of Chicago, help Americans planning for the future consider the options available to them to maintain a comfortable lifestyle in retirement. reinforces the need.
While many older adults rely on their adult children for housing and care, financial advisers who specialize in retirement planning say long-term care insurance could reduce or eliminate the financial shortfalls for retirees to remain independent. suggests that it is useful for
First, let’s look at what long-term care insurance is, who needs it, and when to enroll.
Bradley Hilton said: some points. “
Michael R. Acosta, Financial Planner at Consolidated Planning, added: Those in the middle class or those with family medical conditions should plan to require long-term care insurance. ”
Kevin Lao, Founder and Director of Financial Strategy at Imagine Financial Security, explains:
Long-term care insurance has many parameters that determine the benefits, or premiums.
These include the benefit amount and coverage period.
Hilton notes that the average long-term care needs for men and women are 2.2 and 3.7 years, respectively. He only pays premiums for 3 or 4 years and can keep his premiums low. If you’re concerned about your case taking longer than average, you can try saving elsewhere.
“The average cost of a nursing home is over $100,000 a year and just over $8,000 a month,” says Kevin Rao. , risk cause you to lose sleep, please do.”
Next is the initial exclusion period, or period of time to cover care costs before benefits begin. The longer the deductible period, the lower the risk to the insurer and the cheaper the premium.
Timothy Bock, president of Summit Portfolio Management, said: A yearly pocket is very manageable. ”
Another important point is the exclusion of coverage or in what cases the insurer is not liable. For example, Hilton said:
Conversely, according to Hilton, most policies waive premiums once you receive benefits.
Mr Lao said: Home care he’s 50% and the client doesn’t remember why he bought a policy like this. ”
Both Acosta and Lao suggested exploring other attractive options.
Acosta said: “Currently, carriers are offering traditional long-term care insurance and hybrid options. Hybrid options are more flexible, cost-effective and Often offer fixed guaranteed premiums.With hybrid coverage, insurers often have access to some form of death benefit (which may be guaranteed), investment strategies within sub-accounts , and provide a pool of long-term care insurance.”
“Some policies now have a hybrid life component, which pays a death benefit if you do not use the policy or only use a portion of your long-term care benefits,” Rao added. increase.
The problem here is that long-term care insurance policies have become expensive over time.
Hilton explains why:
Laos offers five tax-efficient ways to cover long-term care.
- “Please use the tax-exempt portion of your health savings account for long-term care insurance premiums.
- “Make a so-called ‘1035 exchange’ of living or annuities with cash value. If you’ve accumulated cash on a permanent (non-term) life insurance policy and may not need retirement coverage, you can pay taxes – exchange the cash value into a long-term care policy for free.
- “The hybrid option described above can protect your investment assets if long-term care is required. If long-term care is not required or the entire benefit pool is not used up, the death benefit will be passed on to the beneficiary.
- “If you have no heirs, or your heirs don’t need your estate, you can self-insure using a tax-free withdrawal from your health savings account assets.401(k) or IRA ( you have to pay taxes anyway) or even a reverse mortgage.
- “If you can afford to be self-insured but want to leave a financial legacy, even if you had to pay for long-term care near the end of your life, you might have to pay for long-term care to replenish your assets when you die.” You can enroll in permanent life insurance for
Most people, especially from their late 40s or early 50s, would at least benefit from considering long-term care insurance. But after more than his decade of rising premiums and declining benefits, buying good coverage is nowhere near as possible or affordable as it once was.
