Mel's Monthly Money Tip: Long Term Care Planning

Long Term Care Planning:

Why is long term care planning important?

• The average life expectancy of a woman who is 65 years old today is around 86 years old and a man who is 65 years old today has an average life expectancy of 84. The passing of time affects your body in multiple ways, and the issues of aging don’t impact just one person. They can impact entire families. Of course, longer lives means the money saved for retirement needs to not only last longer but also be enough to cover long term care costs. Many people mistakenly assume that Medicare and Medicaid will be the funding source, but many people will also be surprised to find out how little government programs actually cover. Planning ahead can help you reduce unpleasant shocks and provide your family with a greater sense of safety about your future.

What are the typical costs for long-term care needs?

• Cost of care varies based on care setting, geographic location of care and level of care required, along with many other things. We typically assume the event occurs for two years and costs grow at 3% annually.
• Check out this Cost of Care Survey: https://www.genworth.com/aging-and-you/finances/cost-of-care.html.-

What are the options for planning for LTC needs?

• Personal funds (investment accounts, retirement account, Health Savings Account).
• Government programs (Medicare, Medicaid, PACE programs, SHIP, Dept of Veteran Affairs, SS Administration programs, National Council on Aging)
• Private financing (long term care insurance, reverse mortgages for seniors, life insurance policies for long-term care, annuities, trusts)

What should we consider when discussing long-term care?

• Where will you receive care?
• How will you pay for it?
• Who will be in charge of the care?

How does Narwhal help clients plan for long-term care?

• Part of the financial planning process includes running a long-term care analysis on your financial plan. We will run the average costs for your area and see if you are projected to have enough assets to cover the event. If this option is not optimal, we will review insurance quotes for you. We do not sell any insurance policies but can weigh the cost and benefits of the policies and help you determine the break-even point. Another option could be to save the projected amount in a separate account (like an HSA).

In addition, it is important to discuss your plan with your family so they understand your wishes and any responsibilities they may have in ensuring you receive the best care possible.

Sources:

U.S. Department of Health and Human Services. (n.d.). Paying for care. National Institute on Aging. Retrieved October 20, 2022, from https://www.nia.nih.gov/health...

Cost of long term care by state: Cost of care report. Genworth. (n.d.). Retrieved October 20, 2022, from https://www.genworth.com/aging...