Here on the AgingOptions blog we’ve written many times about planning for long-term care. It’s a vitally important topic that all too many people would rather avoid, for many reasons. Nevertheless we felt it would be timely to share this recent CNBC article on the subject, written by reporter Darla Mercado. When it comes to thinking about and preparing for long-term care, she writes, there’s a lot more to planning for elder care than “just buying long-term care insurance and calling it a day.”
Long-Term Care Safeguards Are Essential as Care Costs Escalate
“If you wait until you’re 70 to think about long-term care, you’re already late,” Mercado warns. As care costs skyrocket – Genworth’s Cost of Care Survey for 2019 pegs the median yearly cost of a private room in a nursing home at over $102,000 – “lacking a thought-out plan can be a costly error.” Even for those able to age in place, when the need for care arises, the bills can quickly pile up: every visit to your home by a skilled nurse (again according to Genworth) will set you back almost $90. The median annual cost for the services of a home health aide is estimated at well over $52,000.
Long-term care insurance has been the traditional industry answer to rising care costs, but as recently as 2018 only 7.2 million Americans had purchased LTC policies. Still the need for costly care looms in the future for tens of millions of aging men and women. “By the time you reach 65,” said this 2018 AARP report, “chances are about 50-50 that you’ll require paid long-term care (LTC) someday.” The article reports that the average out-of-pocket LTC cost in 2018 hit $140,000, a risk for which most retirees are unprepared. “Long-term care is the unsolved problem for so many people,” one expert on personal finance told AARP.
Long-Term Care Safeguards Are Essential Even If You Have an LTC Policy
As CNBC reports, even those with long-term care insurance policies find that their policies don’t cover everything. For example, if a spouse has to quit work to provide care, there’s a significant indirect cost that people fail to account for. Family members who provide care also face emotional and physical challenges that can have a major impact on their health, something that never shows up on a retirement balance sheet. The important take-away from the CNBC article, we think, is that simply buying an insurance policy is not enough. There are specific steps you should take to be better prepared for whatever the future holds, and the sooner you start planning, the better. “The best time to start plotting out how you’d like to spend the latter years of your life is when you’re about 60,” one expert told CNBC. At that age, parents can have a substantive conversation with their adult kids while still healthy and happy, and it’s also early enough to put some of these precautions into place.
The CNBC article lists four areas in which people should be planning and preparing for long-term care safeguards. These include where you choose to live, how you plan to get around, who is going to watch over your finances, and who is going to ensure you get the right health care. Let’s look briefly at each.
Four Long-Term Care Safeguards
Number One: Where You Choose to Live. “Whether you want to age at home or you’re planning on heading to a continuing care retirement community,” says Mercado in her CNBC article, “discuss your wishes with your family members and strategize with your financial planner on how to pay for it.” Staying at home (that is, aging in place) may be your dream, but it might not be the best option. You’ll need access to transportation and medical care. You’ll need to consider the dangers of isolation, since loneliness is a major issue among today’s elderly. And you may need to bring in a senior housing specialist to evaluate whether your home is a safe place to age. Whatever your wishes, put them down in writing and update them as needed so everyone is on the same page.
Number Two: How You’ll Get Around. For most of us, living independently means enjoying the mobility that comes with a driver’s license. However, says the article, “Knowing when to turn in your car keys can be contentious.” Instead of waiting until the last minute, plan ahead. “Head off conflicts by considering other transportation alternatives you might be willing to use once you lose your ability to drive safely,” Mercado suggests. “This can include getting familiar with ride-sharing via Über and Lyft or learning about your local public transportation options.”
Number Three: Who Will Watch Over Your Finances. Unfortunately, cognitive decline among seniors is a real problem that can make people impulsive and rob them of their good judgment. Even mentally sound seniors can lose financial capacity in times of illness. The advice from CNBC: don’t wait until bills are going unpaid and bank accounts are a mess. Make certain you have named a financial power of attorney, a trusted individual to oversee your finances in the event you’re incapacitated. Simplify bank accounts, retirement accounts and credit cards. We’ve seen hundreds of difficult family situations in which an incapacitated parent has left their finances in shambles, and their kids have to deal with the stress.
Number Four: Who Will Ensure Your Health Care. One financial expert told CNBC that people who fail to prepare advance health care directives face an average of $18,000 in extra out-of-pocket expenses in their last year of life. By drafting your advanced directives, you tell family members and medical personnel how you prefer to receive health care if you’re unable to communicate your wishes. “Think carefully about who should make health-care decisions for you if you’re incapacitated,” says CNBC. “This individual should respect your wishes, which may mean knowing when to end medical interventions.” He or she could be a spouse, sibling, adult child, or friend – someone with the maturity to make certain your desires are respected.
The Biggest Long-Term Care Safeguard is a LifePlan for Your Retirement
As we read this article from CNBC, we couldn’t help noticing that it includes all five of the key pillars we build into a LifePlan from AgingOptions: finances, housing choices, legal protection, medical coverage, and family communication. If you’re ready to get serious about planning for your retirement future, please accept our invitation to join Rajiv Nagaich in person at a free event called a LifePlanning Seminar where he’ll answer your retirement questions and show you the power of a LifePlan. If you’ll visit our Live Events page, you’ll see a calendar of seminar dates and locations – then make your selection and register online, or call us for assistance.
We think you’ll agree: the best long-term safeguard you can employ is a solid, comprehensive plan – and that means a LifePlan. Age on!
(originally reported at www.cnbc.com)