The possibility of needing long-term care insurance can be a thought that one would like to avoid. However, the truth is it should be discussed and taken into consideration in retirement planning, according to CNBC in “Plan ahead to protect your family and your fortune from this retirement risk.”
Consider this: in 2018, the national median annual cost of a semiprivate room in a nursing home was $85,775. A home health aide in 2017 cost $49,192. That’s not small change.
So how do you prepare for long-term care costs?
Start planning now. The earlier in your life that you purchase a long-term care insurance policy, the more likely you’ll be able to afford to buy one. As you get older, they get more expensive—if you can even purchase them at all.
Where would you want to receive care? If you have a choice, would you rather have someone come to the house for a few hours to help, or would you prefer to move to an assisted living facility? Both have costs. However, figuring out which one you’d prefer (if you have a choice), will help in the planning process.
You now can purchase more than just the traditional long-term care policy. There’s also a hybrid cash-value life insurance policy or you can self-insure, if you have the cash on hand.
Who will be making your medical decisions? Have your estate planning attorney put a health care proxy in place—designating a trusted person who will make decisions about your medical care if you should become unable to do so.
Who will make your financial decisions? Your estate planning attorney will most likely also create a power of attorney for you. This must be someone who you trust, someone good at handling money and making decisions and who can take over paying bills and manage your household budget, if you can’t.
Both of these people may never be called upon to act but if they are, you and your family will be in much better shape. Make sure to discuss your choices for health care and finances with these individuals.
In some cases, particularly when it comes to the financial power of attorney, a bank or a professional advisor may be a good choice. They have certain reporting requirements and may be a less emotional choice than a family member.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances including preparation of advanced directives like a health care proxy and a power of attorney.
Reference: CNBC (Aug. 22, 2018) “Plan ahead to protect your family and your fortune from this retirement risk”