by Kerry Peabody, CLTC

Congratulations, you’ve made it! Retirement is right around the corner, and you’re ready to breathe a big sigh of relief. You’ve saved wisely and made good investments… but now there’s one more thing to take care of. You have to make sure that your family and your retirement plan are protected against the need for long term care.

You’re going to spend a long time in retirement, and your money needs to be there for you. Imagine if a few years from now, you suddenly need to start writing checks for $5,000, $6,000, even $10,000 a month to pay for long term care services? Where will that money come from? What will it mean to your spouse? Your family? What will it mean to you if you recover? Most of us would be financially devastated by an unexpected long term care need, and the majority of us will use long term care services at some point in our lives. You may know someone this has happened to, perhaps a family member. If so, then you understand that you need to be ready. If not, then talk to friends, neighbors, and co-workers who have experienced it, and see how it affected their families. Ask your family attorney about the risks. You’ll quickly realize that you need a safety net.

The secret to removing the physical, financial, and emotional burden from your loved ones is having the resources to pay for your care. Today, there are good quality home health care agencies springing up all around the area. Assisted living facilities are booming, and adult day care is now available. These are all excellent sources of quality care, but they all depend on your ability to pay.  Medicare covers only very limited long term care, usually less than a month. Medicaid, or MaineCare, will only help after you’ve spent down your own assets, and then you may not be able to choose where you receive care.

Today, just about anyone over the age of 50 is familiar with long term care insurance. These policies cover home care, adult day care, assisted living facilities, and nursing homes. They are flexible and affordable, with discounts for good health, couples, and domestic partners. New claims data from the industry has given us insight into sensible plan designs and coverage options. This coverage offers a good solution for many families, but it can be a difficult decision to make. You need to consider several things before you choose a plan:

  • Have you compared several companies? One company isn’t always the right answer, so be sure that your agent helps you consider plans and prices from a few quality carriers.
  • What kinds of care does the plan cover, and where?
  • How does your Elimination Period, or deductible, work?
  • Does your plan have Inflation Protection? Without it, you may not have adequate benefits when you need them.
  • Is the company you’re considering financially strong?
  • Is the company experienced in long term care, or new to the industry?

These are a few of the things to keep in mind when choosing a plan, but you also must consider your age and health. If you’re fifty or older, then the best time to do this is now. You will not save money by waiting until you’re older to put this in place; in fact, you’ll pay far more over the long run by putting it off. And remember, you will need to be medically underwritten to get a policy. This means that the company will review your health history, so apply while you’re young and healthy. It’s not uncommon for people in their 40s to purchase long term care insurance.

Right now you’re self-insured for long term care. That means that the first place you’ll turn to pay for care is your own money. Can your retirement plan support a cost like this? If not, then explore your options. Talk to your elder law or estate planning attorney and CPA, find a long term care insurance specialist, and explore your options. Don’t walk the retirement tightrope without a safety net.

Kerry Peabody, CSA, CLTC