Planning and organizing your finances to pay for potential long-term care needs can feel daunting at best. But, not having a plan in place or a savings to pull from can cause undue stress for you or family members. Talking about it now can help for a smoother transition down the road.
Who Needs Long Term Care?
Planning ahead and talking about the different scenarios of at-home or long-term care facilities can help your family best prepare yourself should the need arise. What is the likelihood you or a loved one will require long-term care? Morningstar, an investment research company, reported in 2017 that 52.3 percent of the people turning 65 will have a long-term care need during their lifetime. If you’re able, reference your family medical history. Do you have a high likelihood of cancer? Do your elders live a long time? Are there hereditary illnesses and conditions that could impact you? Does your family have a history of dementia or Alzheimer’s? Finding the answers to most of these can help guide you during your planning.
What lifestyle choices are you making now, and how can you reduce the risk of injury or onset of illness? We’ve all heard the praises of diet and exercise. “New research shows that regular physical activity can reduce the inflammation in the body that comes with aging, which could also help decrease your risk of developing related diseases and conditions—like heart disease, depression, decreased mental function and loss of muscle mass,” reported Men’s Journal. Smoking has been linked to increased development of diseases such as dementia and Alzheimer’s. Taking steps now to help course correct your health may serve you well in the future.
How close are you to retirement? The Balance reports the average retirement age in the United States is 63, though it varies by state. States with a higher cost of living see people retiring at a later age, presumably in order to plan for those higher costs once income has been reduced. How does this factor into how and when you may need long-term care?
Using Your Home to Leverage Costs
How do you plan to pay for the costs of long-term care? The national average for a semi-private room in a nursing home costs over $6,800 a month, according to LongTermCare.gov, with assisted living facilities nearing $4,000 a month. Of course costs depend on which state you reside. Consider the possibility of refinancing, taking out a reverse mortgage, or selling your home as viable options to help you cover long-term care costs given the current average home listing prices in your area. For instance, the average cost of a home in Portland is $415,000. The profits from the sale could help to pay for long-term care costs.
Saving and Insurance Programs
What are the savings/insurance programs available now to help pay for long-term care? Many employers offer a 401(k) program, which is a government-backed retirement savings plan that allows eligible employees to save and invest for their retirement on a tax-deferred basis. If your company offers a 401(k) matching program, take advantage of it. You’re essentially leaving money on the table of you aren’t maximizing what your company will match.
Consider investing in an IRA, where you can grow money tax-free. Investigate the differences between a Simple, SEP or Roth IRA before deciding which would work best for you and your family. Look into a long-term health care insurance. Forbes reports, “About 25 percent of people need long-term care for more than two years.”
Planning for and anticipating long-term care needs doesn’t need to be a scary proposition. Talking with family members and gathering data about health histories, insurance options and home equity, are some of the ways to build a bigger picture about what’s right for your long-term care needs.
June Duncan is the co-creator of Rise Up for Caregivers, which offers support for family members and friends who have taken on the responsibility of caring for their loved ones. She is author of the upcoming book, The Complete Guide to Caregiving: A Daily Companion for New Senior Caregivers.
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