You’ve raised your kids, worked to retirement, and even have a little nest egg to enjoy during your golden years. These days should be grandbaby kisses and smooth sailing. You’ve earned it.
But what about your care expenses in your latter years? Are you prepared for that?
Each year an estimated 12 million Americans need some kind of long term care and a 65-year-old will have a 52% chance of needing long-term care of some kind in their retirement years, often during the last five years of their life. A diagnoses of alzheimer’s or another progressive neurological condition can mean that care is required for an even greater extended period of time.
At this stage in your life, term life insurance has probably expired and, while you can borrow from a permanent life policy or investment accounts, you run the risk of spending your children’s inheritance on your personal care.
Long-term care insurance is the product designed to protect you and your children from this significant risk. It is designed to cover long-term services and supports, including personal and custodial care as a variety of locations including your home or an assisted living facility. It covers care that is not covered by regular health insurance like bathing, dressing, or getting in and out of bed.
Should You Have Long-Term Care Insurance?
If You’re Over 55.
Long term care insurance gets more expensive to buy as you get older, having annual rate increases of 2-4% in your 50s that grow to 6-8% in your 60s. You also have to “health qualify” for long-term care insurance so it’s important that you purchase a policy while you are still healthy. Health tends to deteriorate as you age and that can make it more difficult to qualify for this type of insurance. You can, however, lock in discounts for good health and you won’t lose them as your health changes.
If You Are Not Self-Insured.
Depending upon your portfolio, you may feel ready to roll the dice on your long-term care. Having a significant savings set aside for the purpose of your end-of-life healthcare is an option. However, before you make that decision, consider the potential costs.
Long term care services are used, on average, for about three years, according to the Department of Health and Human Services. Depending upon the standard of care you have in mind, that can cost more than you think. The annual cost of a private room was around $92,378 in 2016. And even if you opt for home health care, the costs can be staggering, $3,862/month for an in-home aide or $3,813/month for homemaker care (hiring someone to help with household tasks). Neglecting to plan properly can negatively impact your lifestyle in your last years.
If You Don’t Have (Or Want to Have) Caregivers.
Having children care for parents in their declining years is part of the circle of life. You invested in your kids and now it’s their turn to invest in you. That may be true but the cost for caregivers can be burdensome, both financially and emotionally. Remember, if we’re talking about long-term care, we’re talking about needing specialized care for an average of three years. The average adult child caregiver loses $303,880 in lifetime wages and retirement benefits due to quitting, changing or cutting back hours at their jobs. These caregivers are also more likely to neglect their own health and suffer from depression, stress, heart disease, or alcohol abuse. Given the choice, putting the burden entirely on your children isn’t the legacy you want to leave.
Long-term care insurance is costly but it does what all good insurance should do, it protects you from risk that is too much for you and for your children to bear on your own.
It’s always difficult to invest in a policy that you hope you never have to use but there is peace of mind in knowing that you’ll be taken care of without placing an undue burden on your kids.
If you would like to sit down and talk about long-term care insurance for you or for your parents, contact your local Compass Insurance Partners Agent and we’ll be happy to help you.