Are you among the half of Americans who feel behind on their retirement savings goals? While some have already started to plan, few have taken the necessary steps to assure they will retire comfortably. And, a major, often ignored component of retirement planning is long-term care. A one-size-fits-all plan doesn’t exist, but, with some preparation, you can find an arrangement that financially suits your needs.
Consider these financial tips when planning for your long-term care in order to find the right approach for you:
- Start early: According to an Economic Policy Institute analysis of a 2013 Federal Reserve survey of consumer finances, the typical American couple has saved only $5,000 for their retirement. The earlier you start saving for retirement, the more personal funds you will have at your disposal to fund long-term care insurance or unexpected costs. Contrary to popular belief, Medicare does not provide long-term insurance. Without supplemental insurance plans, an individual must use Medicaid to fund long-term care. And, by using Medicaid, a person is most often required to exhaust their personal expenses before receiving government funding. Starting early can save you money on long-term insurance plans, health savings accounts or supplemental plans to meet your future costs.
- Consider your options: When planning for long-term care, first consider your net worth. In general, if you have between $200,000 and $2 million in assets, it’s worth investing in long-term care insurance. Less than this amount will require more creative planning, such as relying on government entitlement programs. If your assets exceed $2 million, you likely can afford to personally fund your future care. After evaluating your options, examine the purpose behind planning for long-term care: Are you trying to protect your estate or looking to guarantee your basic needs? The options you choose will depend on your resources and goals.
- Do your research: Not all long-term care providers are equal. Conducting basic research on products, comparing price quotes, and checking with consumer advocacy groups can better ensure a competitive price for long-term care services. Consider variables – such as benefits, inflation costs, and payment periods – which affect the price of long-term care. Determining what you need and what you can afford will allow you to choose a policy that fits you. As a general rule, flexible plans that provide a cushion to your personal finances can help you better manage your long-term care needs.
Planning for long-term care can be a complicated and uncomfortable process, but with proper consideration, you can take the steps necessary to protect yourself and your assets during retirement. As always, a CERTIFIED FINANCIAL PLANNER™ professional is skilled in understanding the complexities of long-term care and can help you create an affordable plan for your future.