Planning to Live in Retirement Edition 12: The Unexpected
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None of us truly know how long we need our retirement funds to last and how the ebb and flow of life will impact even the best made plan. My parents lived to 84 and 86, respectably long lives, in their own home, without assistance, with the exception of family help with laundry and a bit of housekeeping, tasks they could have hired out had we not all helped. I feel like overall, I lead a healthier life than my parents, and barring an accident, have no real risk factors for heart or cancer. My RA and osteoarthritis are not always easy with flare-ups, but not debilitating. But, things could change. I may need assisted living, memory care, or full nursing home care before I pass away
I feel like I need to add a late life/ long term care policy to my planning. I know these get more expensive with each year, but I also don't want decades of premiums for something I may not need until much much later or possibly, like my parents, not at all. More importantly, I do not want to be a burden on my kids, by putting unrealistic expectations to never put me in care. I know if they made that decision, it would include me if I have faculty to be part of the conversation. If not, I trust they'd make the decision based on what's best for me and them both. Part of my planning to live in retirement is making sure I'm realistically planning for when I am on my way out.
With risk to Medicare or minimally significant changes to it plus wrap around policies, I want to be the driver to the options to protect me and my family. I'm happy to get recommendations on plans or companies to get quotes. Some of you are ahead of me in planning, some might be wondering too, and for others this is just a very dull post. Let me know your thoughts about what age I should make sure to have something in place.
My husband and I (late 60's) have decided not to purchase long term care insurance. We have heard about companies going bankrupt or promising they would never raise their rates (but spoiler alert, they did). Mainly, however, it's because we have had two friends whose parents bought the policies report that when they submitted claims, they were denied (both surrounding care in their homes). My cousin who worked as a social worker with kidney patients on dialysis also had many stories of claim denials.
ReplyDeleteIt's good you're starting your research (and I just realized you asked for info on specific companies, so my two cents are not helpful).
Your two cents is worth a lot. This is stuff I need to understand and learn.
DeleteFinancial planner told my sister to buy at 65-like you she widowed very young. We haven't and won't purchase a policy. We each have a pension that the other can take as an annuity so have each other covered and (unfortunately?) our home is valued high enough to cover us for several years of high monthly cost.
ReplyDeleteIndeed it is a crap shoot!
I know- just not sure the best option, but maybe investing more in another annuity might make good sense too. I just don't know what those high monthly costs might be...$10,000 a month, $20,0000, and for how long. It seems two -four years from friends experience with their parents has been the range of need.
DeleteI'm not purchasing long term care either. If/when that becomes necessary, my home can be sold and easily cover that cost. Earnings from investing the money from my home would cover most, if not all, of the monthly care costs at $10,000+ per month.
ReplyDeleteWhat others said; I'd avoid long-term care policies too. Most CPAs, financial advisors, and such recommend against purchasing them; often the "exceptions" (in the fine print) are so numerous that the policies end up covering very little of one's long-term care. I have a dear friend whose mother (89+) has been paying on one for years; my friend, who is retired from working in the insurance industry, showed her mother how little it would pay if she actually went into long-term care. Didn't make a difference; she still pays...
ReplyDeleteIf you don't have one, it might be worth your time to find and just talk with a financial advisor as to possible paths for you. You might also look for a workshop put on by someone affiliated with the Financial Planning Association (FPA), whose members give free workshops, not to drum up clients, but to educate the public. (Yes, the speakers hope that maybe they will get clients from it, but they are not like those (also free) workshops/meals put on by estate planning lawyers who then scare the crap out of the attendees about how they have to avoid probate at any cost, and for $$$$$$$, they will help you do that.)
Two of my husband’s aunts paid for decades on policies and then were denied. I wouldn’t buy one no matter my financial situation.
ReplyDeleteDH purchased supplemental coverage through Medicare which includes LTC. He got it about 15 years ago. (He is considerably older than me.) I don’t know he would have if we were in a different situation, as in closer in age, and didn’t have minor children in the home as we did at the time he signed up. I think we would do as One.
ReplyDeleteI WOULD highly encourage you to make sure, however, that you have a generous short term care coverage, for a stay at a rehab clinic, for any PT, OT and speech therapy services until you were recovered emotionally do be back home. All it would take is a slip on the ice, bump on the head, or infected wound to need that, something you can’t really predict.
ALSO, if you are going to stay in your current house, may I suggest you have a safety check done? I don’t care if you just have a friend who is an RN walk through your house and point out risk areas. At the very least, please get grab bars* in at least one bathroom by the toilet, and as close to zero level entry in your main door to the house as possible. Trust me, it’s much better to have them and not need them than the alternative! If you get the grab bars. Make sure they are mounted on a double backed mount for extra stability.(* I seem to think that some counties in our great state require grab bars in at least one bathroom on all new construction. I might be wrong, but I think that’s what my contractor said.)
If you want to stay in your home, and be independent, now is the time to not just think about, but accomplish these things, as it is far easier to do it before you need them. I don’t mean to lecture, I am sharing my experience.
If you like I can email you pics of my bath grab bars, (master and powder room) as well as entry railings so you can see how unnoticeable but invaluable they are.
-Meg B.
(Ack..” until you recovered emotionally “ not sure why it autocorrected to that…I meant to type “until you recovered enough to manage mostly independently back home”
Delete-Meg B.
I would investigate how much the monthly premium is for Long term Care policy. If you think you can work that dollar amount into your budget then I would open up a separate investment account and deposit the money into that account.
ReplyDeleteMy Mom didn't want to be in nursing home and wanted to be home with me. I did my best to take care of her, but it was extremely difficult. I had to be on call 24/7 and there were no breaks. It broke my heart and I finally asked my brother and sister to help me, so my sister came from Michigan to get her for a little bit, but then she passed away ten days later. To this day I am grateful my sister got those last ten days with her as they had lived several states away from each other for thirty years.
ReplyDeleteMy parents (both 93) live 3 houses away. I have been taking care (with help) for four years now. I have a family of my own as well. Told my sons I will never want them to do that for me. I love my parents very much but is is very hard, it is like my own life is on a halt. So I will try to solve it another way for me. Even though our government expects family to take care of the elderly it will become more difficult with people having less children or living further away.
DeleteI have a two year bare bones long term care insurance plan and I have had it for almost five years. Honestly, I think they are a waste of money and I would have done better with a hybrid, whole life policy with a long term care rider. New York Life has a good insurance rating with that type of policy. I know folks gag at whole life but this one has a specific long term care feature. I just didn’t want to pay the premium. Nearly everyone I have talked to recently has had difficulties with their LTC policy paying. My uncle had a great one but his was the old school unlimited years plan and those type of policies no longer can be bought to my knowledge. The other option is to self insure by putting money in market, or a CD ,in an account you set aside specifically for long term care and if you die before you use it, leave it to heirs. Cindy in the South
ReplyDeleteAlso the premiums go up
DeleteOn LTC regular insurance policies and you don’t know how much the premium will be when you are 80 and needing to use the policy. I have heard horror stories of folks not being able to afford the policy anymore and dropping it right before they need it. The benefit, if ai understand correctly, on the
Whole life policy with the LTC feature is that the premium does not go up.
I truly wish I had bought that policy.
I personally think my kids will have difficulty getting my LTC policy to pay. Cindy in the South
I don't know if I can reply well enough to all of you, but I do appreciate your advice, experience, perception and all. I think I've got new options to look at. I know I shouldn't worry about my kids and leaving inheritance, but I can't help that since they lost their dad so young. I know between retirement pension, ssi, retirement investment, whole life with a disability rider, an annuity, savings, and lastly my house, there should be more than enough there. I guess I read I go the hype on all the commercials and thought dang, I better get on that. To Meg, yes- such smart planning to do now. Realistically, it'd be unlikely I won't need to move to single level living at some point. There's no single floor bath or bedroom in this house ( it's a young family house (maximized living for family with kids), so not sure how much to invest in this house or just know I need to keep that in mind when I start looking.
ReplyDeleteWe do not have long-term care. We have figured if it comes to that, when we are unable to remain in our home, the proceeds from the sale of the home should get us through to the end. So that's something to think about for your situation, too. We don't have children, and the senior living complex we are planning to move into, should the need arise, requires 3 years of rent, and if you run out of money after that, they never kick you out. My father is there currently & loves it.
ReplyDelete(FYI we are 63 & 73).
NGL, Rhonda Bills, 515-957-9333. I highly recommend Rhonda, she will walk you through the process and give you several options to choose from.
ReplyDeleteMy policy has in home care option.......
DeleteI don't really have anything to add to what has already been said. Your reply to all is pretty much my take as well. Thoroughly check out your options, as each persons situation is unique.
ReplyDeleteMy parents had long term care insurance, but Dad's illness took him quickly and he never needed it. Mom would have been a candidate for a memory care facility the last year of her life, but in her moments of clarity she was panicked at the thought of living somewhere other than her home. My sister and I went to her house daily, but we also had 24/7 sitters for her, which long term insurance does not cover. Looking back, for them it was a waste of money.
ReplyDeleteMeg B gave you some seriously good advice about your house.
Gosh, everyone seems to be on the same page about not buying LTC insurance. It's good to know isn't it. Like you I don't want to be a burden on my kids in later life, but I think Meg B. makes very good points about getting safety features installed before you need them!
ReplyDeleteYou are almost always better off self-saving what are now very high LTC policy premiums compared to in past decades, the result of usage outpacing premiums. Prices have risen so much that if you can afford the premiums today, you very likely can already afford the actual LTC monthly premiums, which you statistically won't need for an extended period of time. If the opposite were true, no insurance company would be able to remain in business.
ReplyDeleteWith regard to annuities in general, and LTC annuities in particular- Financial planners push LTC annuities, because they pay BIG commissions. Think about that- who really stands to gain here? Plus you give up all control of your own money in the case of an LTC annuity - please don't do that.
I recommend checking out a terrific, well moderated forum of very intelligent early to not-so-early retirees where extensive conversations about LTC policies and annuities can be found. The site is early-retirement.org
I'm going to be in charge. I will go by my own hand when I think it's time.
ReplyDelete