By Lee Sherman
Getting older isn’t for the destitute. If you’re like most Americans, you will ultimately face the unwelcome prospect of having to move into a long-term care facility. But, if you have the means, this doesn’t have to harm your finances.
70% of those turning age 65 today will need some type of long-term care, according to the US. Department of Health and Human Services. But don’t wait too long. Long-term care costs are a critical part of your financial plan, and most people buy coverage in their mid-50s to mid-60s. Not only might you become ineligible due to a pre-existing condition, but the price goes up dramatically the longer you wait (it can be as much as double if you wait until age 75).
Don’t make the mistake of thinking Medicare will cover you. Long-term care insurance will pay for assisted living, nursing home care, or home health care if you can no longer care for yourself due to a chronic condition, disability, or a disorder such as Alzheimer’s. And even if you manage to avoid most of the ravages of aging, you may find yourself needing some assistance with things like getting dressed, grocery shopping, cooking, or driving to medical appointments. Some seniors thrive in a group setting where they can get a lot of social interaction, while others prefer to stay in their own homes where they can be attended to by a live-in or on-call nurse. Long-term care insurance can help you maintain the lifestyle you have now.
Other Financial Considerations
Long-term care starts with an insurance policy, but if you become incapacitated, you won’t be able to manage your estate or make health care decisions for yourself. Make sure you have designated someone as your Durable Power of Attorney so that they can act on your behalf.
Financial advisors recommend you establish a Living Trust. In a Living Trust, your assets are put into a trust administered for your benefit during your lifetime, and transferred to your beneficiaries when you die. As with the Durable Power of Attorney, you’ll want to make sure you’ve named a successor trustee. This person manages the trust’s assets should you become incapacitated or in the event of your death.
If you have a large or complex estate, consider establishing a Family Office. Among other things, a Family Office acts as a dedicated wealth management firm, handling your investments, tax planning, estate planning, and philanthropic planning.
And while you are still of sound mind and body, it’s an excellent time to consult a financial advisor as to how your long-term care will affect your income, estate, and inheritance tax planning.
Lee Sherman is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Lee is an experienced journalist and editor with over 30 years of expertise with a significant history of writing in the personal finance and technology arenas.