Having a well thought out long-term care strategy is critical to the success of your retirement plan.
I was recently a guest on Anita Johnson’s radio show Money Wisdom for Women. I had the opportunity to discuss a topic that is near and dear to my heart-long term care planning. I have covered some of the highlights below.
Lack of a well thought out long term care strategy can derail a really good retirement plan. Before you can create a strategy, it is important to understand what long-term care is:
Long-term care is a generic term that covers the services that individuals may need due to age or health related problems. The individual may need assistance with performing activities of daily living such as:
- Bathing, walking, help with taking medication, shopping, cooking and driving.
- Long-term care services can be provided in home, assisted living or in a nursing home.
Whether you purchase long-term care insurance or choose to self-insure, it is critical that you have a well thought out strategy. Here are three reasons why you need a long-term care strategy:
- Why is it important?
Consider these statistics according to wiserwomen.org:
- More than half of all seniors will need long term care
- The average nursing home stay is 2 1/2 years and costs run on average between $70,000 to $80,000 per year.
- Why is long-term care a women’s issue?
Long term care is a woman’s issue. Long-term care impacts women both as caregivers and as recipients:
a) Women are Caregivers: Women are more likely than men to be caregivers to children, spouses, and aging family members. We spend more time out of the workforce to which can impact our retirement and other benefits.
b) Women Live Longer Than Men: On average, women outlive men by about five years. A healthy 65-year-old woman has a 50% chance of living beyond age 88 and a 25% chance of living beyond 94.3 (wiserwomen.org).
Typically, the woman is the caregiver for the spouse and the resources go to take care of him. Unfortunately, when the time comes for her care there are no resources and/or no family available to provide care for her.
c) Women Spend More Time in Nursing Homes then Men: People who spend years in a nursing home tend to be single females over 80 suffering from dementia.
- How to create a long term care strategy?
Here are three questions you need to answer as you create your long-term care strategy:
- What type of care do you want?
- Do you want to stay in your home as long as possible?
- How will you pay for your care?
There are basically three options for funding your long term care services:
- Out of your own pocket: This option can be very expensive
- Medicaid only covers long-term care for low-income individuals
- With a long-term care insurance policy
Typically, you should start thinking about creating your strategy in your mid-forties to early fifties.
Whether you purchase long-term care insurance or choose to self-insure, it is critical that you have a well thought out strategy.