By Michael Smith
Living longer is good news. In fact, one out of every three 65-year-olds can expect to live past age 90. But longer lives also require us to think differently about retirement income, caregiving, and how we plan to pay for care.
According to research cited by MassMutual, 80% of people turning 65 will need some form of long-term care in the future. The potential cost is significant: national median costs are approximately $64,200 annually for assisted living and $116,800 for a private nursing-home room.
Long-term care may not be what you think
One of the biggest misconceptions is that long-term care is simply another form of health care. It isn’t. Health insurance generally pays for medical treatment. Long-term care, by contrast, primarily provides ongoing help when someone can no longer independently perform everyday activities such as bathing, dressing or eating.
Most people picture a nursing home when they think long term care, but care can occur across a spectrum – from your own home to adult day centers, assisted living and, when necessary, a nursing facility.
Another misconception is, “Medicare will take care of it.” Medicare provides limited coverage for certain short-term skilled or rehabilitative care; it is not designed to pay for ongoing custodial care such as bathing and dressing. Medicaid may help eligible individuals, but financial requirements, covered services and benefits vary by state and individual circumstances.
The hidden cost: your family
The financial cost is only part of the story. Perhaps the most overlooked long-term care question isn’t simply, “Who will pay for me?” but rather, “Who will take care of me?”
We often rely on family members to fill the gaps left by professional caregivers. But today’s families are smaller and frequently geographically dispersed. Many adults are also part of the “sandwich generation” – raising children, managing careers and helping aging parents.
That geographic distance hits home for me as I have an aging mother in Virginia. Like many adult children, I think about what happens if she needs more help. How do I balance being there for someone I love with the realities of distance, work and my own family? And, candidly, there can be guilt when you can’t simply be there whenever you’re needed.
Caregiving can affect careers, income, health, and family relationships. According to research developed by my colleague Nick Filippini at Vista Wealth Solutions, 67% of family caregivers report difficulty balancing career and caregiving responsibilities. Planning ahead can help your loved ones remain your family rather than unintentionally becoming your full-time caregivers.
So, what’s the solution?
There isn’t one answer for everyone. Some people have sufficient assets to self-fund care. Others may rely partly on government programs or family support. Insurance designed to provide long-term care benefits is another alternative.
And long-term care insurance doesn’t have to resemble auto insurance – “use it or lose it.” While that can characterize traditional coverage, other approaches exist today. For example, hybrid life insurance/long-term care strategies can combine permanent life insurance with long-term care benefits.
The right approach depends on your age, health, assets, family situation, retirement income and what you want to protect. Consider three questions: Will my plan help protect my assets and legacy? Will it reduce the potential burden on my loved ones? Will it give me choices about where and how I receive care?
You can’t predict whether you’ll need long-term care. But you can plan for the possibility.
Having clarity about who you want providing your care, where you would like to receive it, and how you would pay for it can provide something equally valuable: peace of mind for you and the people you love.
Bio
Michael Smith is a financial professional who helps businesses, organizations, and professionals bring clarity to complex financial decisions. A former Chief Human Resources Officer with more than 25 years of experience in compensation, benefits and workforce strategy, Michael brings a unique perspective connecting business solutions, people and financial planning. Working with Savas Saymaz, ChFC, PhD and the 360 Wealth Strategies team, he helps employers optimize workplace benefits, retirement and financial strategies to strengthen their organizations and compete for talent, while helping business owners and professionals align investments, benefits and financial strategies with their long-term goals.
Tel: (703) 579-7913 | Text: (610) 850-9434
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