Most people look forward to living a long, healthy life, planning and investing throughout their working years with the goal in mind of creating a financially secure future during which they can enjoy spending their time doing the things they love most. The area that is often overlooked is the risk of a long term illness and its impact on the overall financial planning process, one’s assets, their family and the future.
Unfortunately, the longer one lives, the greater the likelihood that long term care may be required. Waiting to address long term care needs until the point when the care is actually needed may significantly impact your financial situation, quality of life and ability to maintain your independence.
The costs associated with long term care are significant. It can take decades to accumulate assets needed to retire comfortably, while only a very few short years of paying for long term care could threaten a lifetime of savings.
The physical and emotional toll attributed to a care giving situation is staggering. Providing care for loved ones is truly an act of compassion, but does it make sense placing these burdens on spouses, children or other family members? This can create significant emotional and physical strain and should be avoided at all costs.
Many people will find it hard to envision themselves needing assistance with basic living activities, such as bathing, getting dressed, or even eating. The avoidance of thinking about this possibility will not defer it from happening. The fact is that some 70% of the people reaching age 65 will require some form of long term care services. However, the biggest unknown and possibly biggest risk relates to the length of time one may need to receive these services. This is impossible to predict, as some may only need a few months while others, such as Alzheimer’s patients, may require 24 hour care for over ten years.
Taking into account the current and future projected costs of long term care and the horrendous impact to the families and finances, should make one stop and think about how big these risks actually are.
The cost of care is exceedingly expensive, running a minimum of $75,000 per year. With inflation, in 30 years that same costs could be as much as $250,000. This means that three years spent in a nursing home, which is less than the average, could cost as much as $750,000 in 30 years. These estimates are based on a CPI inflation factor of 4.1%.
Incorporating a long term care program of insurance into your financial plan will help protect assets, reduce the burden of care that otherwise falls on your family members, and enable one to receive care in the setting they would most prefer, including their home.
The single greatest benefit provided by planning for long term care is that the insurance you purchase will allow your loved ones to care ABOUT you instead of having to care FOR you.
Part II – types of available insurance – will follow in an upcoming article.