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6 Ways to Pay for Long-Term Care During Retirement Thumbnail

6 Ways to Pay for Long-Term Care During Retirement

Today’s retirees have several options when it comes to paying for the cost of long-term care. Even if you won’t qualify for traditional long-term care insurance, there are several new life insurance products on the market specifically designed to help you address this problem without draining your savings. The following six options give you an opportunity to prepare for the realities coming down the road so you can meet them head on with dignity and independence.

Paying for Long-Term Care (LTC)

Option #1: Your wallet. This option is known in the financial industry as self-funding, meaning you pay for it yourself. What might that look like? If you have an additional million dollars (outside of the money you need for retirement income) earning a 4 percent rate return, that will generate another $40,000 without spending down your principal. The average annual cost for a semi-private room in a nursing home is $74,820.

Option #2: Medicare. Contrary to popular belief, Medicare isn’t really designed to cover the costs of long-term care. The average stay in a nursing home is three years, but Medicare only pays for the first 100 days.

Option #3: Medicaid. As a federally funded program administered at the State level, Medicaid does pay for the largest share of long-term care services, but in order to qualify, your total income and assets must be below a certain level and you must meet certain State eligibility requirements. These asset minimums limits don’t usually result in the conditions or lifestyle anyone would plan for.(The key to success with this option is pre-planning, something that should be done with the help of a qualified certified long-term care planner well before an individual needs long-term care.)

Option #4: Your Health Insurance. Many employer-sponsored or private health insurance plans cover the same kinds of services as Medicare, meaning these services are limited. If they do cover long-term care, it is typically onlyfor skilled, short-term and medically necessary care.

Option #5: Traditional Long-Term Care Insurance. While this option gives you the most comprehensive care, it is relatively expensive. When you consider that the U.S. Department of Health and Human Services reports that 70 percent of all people turning 65 today will need some form of long-term care, the price right now just might be worth the cost later.

Option #6: Life Insurance. Many life insurance products offer living benefits and riders that accelerate your death benefit. This means you are able to start receiving the money that would ordinarily be paid out to your beneficiaries right now, while you are still living. This can be an attractive solution to retirees who no longer qualify for traditional long-term care insurance.

Earlier Is Better When It Comes to Retirement Planning

Make a plan now for the realities of long-term care so you have more choices later. Planning protects your independence. 

Remember, you have options when it comes to funding the cost of long-term care, and the sooner you make preparations, the more control you will have over your own independence.

To find out what you can do to prepare, contact us today to request a no-obligation, personal financial review!