Last posted at LTCNews
The market has been up since the start of 2017. This isn’t new, you’ve seen this before. However, if you are contributing to your 401k plan (or your personal IRA or SEP) you know retirement planning and investing is a long-term process. If you are properly diversified and you contribute money on a regular basis your retirement savings should be fine … but…
What is the “but”? One of the biggest risks to your future, or current, retirement savings is the cost of extended Long Term Health Care. Imagine being older, needing extended care and needing large amounts of unbudgeted money to pay for care. If you have to sell off 401k money when the market is down that would have a huge impact on your retirement, your spouse’s lifestyle and not to mention elimination of legacy and even a burden on loved ones.
Some people ignore this concern with two thoughts which are both wrong. One is the government or health insurance will pay for this care or they will never need care to begin with.
Just recently, the White House released a report from the White House Conference on Aging (WHCOA). This conference is hosted by the President every decade. The recent conference discussed the many issues of aging in America.
The WHCOA report says a person turning age 65 had a 69 percent risk of needing Long Term Health Care services for an average of three years during the remainder of their lifetime. This corresponds to a US Senate Report that indicated it is 70%. Perhaps one is rounded down or rounded up, in either case it is a big risk.
Experts suggest the advances in medical science are at play here. We live longer, we survive health events and accidents more than ever before. In short, it is hard to die! So even if you think you are healthy, you may still require help with activities of daily living just because you are old. Don’t “forget” your chances of memory issues increase with age as well. Plus, health issues come up unexpected at any time.
Then you have some people think their health insurance, Obamacare or Medicare (health insurance when you are 65+) will pay for this type of extended care. The answer here is no. What insurance or Medicare covers is a very small amount of “skilled care” and only if you are improving. Those programs pay nothing toward “custodial care”, personal care (help with activities of daily living or supervision due to memory issues) which is the type of care most people will require in the long term.
The Medicaid program will pay for custodial care only if you are poor or you lose a majority of your assets. Ouch!
“The role of public programs such as Medicare and Medicaid in financing long-term services and supports is commonly misunderstood. While Medicaid is the largest payer of long-term services and supports, roughly a third of pre-retirees incorrectly assume Medicare pays the most,” the White House report says.
Protecting your future retirement savings is something you need to start planning for while you have good health. Long Term Care insurance is an easy and affordable way to get this accomplished.
In addition, many states are involved in the Partnership Program. This program provides dollar-for-dollar asset protection if you have a qualified LTC policy. The Long Term Care Partnership Program is a collaboration between state government and insurance companies. Under this partnership, applicants who purchase qualifying long-term care insurance policies can access Medicaid coverage while retaining assets they would normally be required to spend on their long-term care. This is referred to as dollar-for-dollar asset protection or asset disregard.
“We don’t see a reason why anyone would get an LTC policy that’s not in a state partnership program. States developed these programs because much of the cost of Long Term Care falls on them. If you’re poor, Medicaid picks up the tab. States spend billions of dollars on care for citizens who have no money. The partnership concept is a good idea for helping solve this dilemma,” said Ric Edelman, a nationally known independent financial advisor.
Since those of us try to save money, contribute to our 401k’s and want to have a successful retirement; the last thing you want to is lose a majority of your hard-earned assets when you can easily avoid it. Some of those who don’t plan end up in a state-run government plan like Medicaid.
“We are facing a tsunami of care needs for aging Americans,” declares Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI) a national consumer advocacy and education group.
“There is already a huge financial, emotional and physical strain on individuals and families who must pay for or provide care for aging spouses and parents,” Slome notes. Total national spending for long term care services exceeds $300 billion annually according to AALTCI, with Medicaid covering just over half of total expenditures.
“Concern about financial security during retirement resulted in the creation of 401(k) and IRA retirement savings vehicles and today 50 million Americans participate in one of these plans,” Slome shares. “Now we need to address Long Term Care.”
The AALTCI suggests working with a specialist in LTC planning. You can find one at their website (www.aaltci.org). You see the road sign ahead, take action and plan now to protect your hard earned savings.