long term care

30Mar

Not To Scare, but with Age Comes Long-Term Care

BlogMarch 30, 2023

As people are living longer, the need for long-term care in retirement is becoming increasingly important. Long-term care refers to the assistance that individuals may require with activities of daily living, such as bathing, dressing, and eating. In this article, we will explore the increasing need for long-term care in retirement and what individuals can do to prepare for this potential expense.

Why the Need for Long-Term Care is Increasing

The need for long-term care in retirement is increasing for several reasons:

Longer life expectancy: As people live longer, the likelihood of requiring long-term care increases.
Age-related health issues: As individuals age, they may experience a range of health issues that can impact their ability to perform activities of daily living.
Rising healthcare costs: Healthcare costs continue to rise, and long-term care expenses can be particularly expensive.
Changes in family structure: Changes in family structure, such as a decrease in the number of family members available to provide care, can make long-term care an increasingly important consideration.

The Costs of Long-Term Care

Long-term care can be expensive, and it is important to understand the potential costs associated with this type of care. The cost of long-term care can vary depending on several factors, including the type of care required, the geographic location, and the length of care required. According to a recent survey by Genworth, the national median cost of long-term care ranges from $4,576 per month for a home health aide to $8,821 per month for a private room in a nursing home.

Preparing for Long-Term Care

There are several steps that individuals can take to prepare for the potential need for long-term care in retirement:

Long-term care insurance: Long-term care insurance can help to cover the costs of long-term care, and can be a good option for individuals looking to protect their retirement savings from potential long-term care expenses.
Health savings accounts (HSAs): HSAs can be used to save for future healthcare expenses, including long-term care.
Lifestyle modifications: Making healthy lifestyle choices can help to reduce the risk of age-related health issues that may require long-term care.
Retirement planning: Including the potential costs of long-term care in retirement planning can help to ensure that individuals are financially prepared for this potential expense.

The need for long-term care in retirement is increasing, and it is important for individuals to understand the potential costs associated with this type of care. By taking steps to prepare for long-term care, such as purchasing long-term care insurance, utilizing health savings accounts, and including the potential costs of long-term care in retirement planning, individuals can help to ensure that they are financially prepared for this potential expense.

24Oct

Your Options for Facility-Based Care in Retirement

BlogOctober 24, 2022

Nursing homes are not your only option for care in retirement. Some facilities offer only housing and housekeeping, but many do provide a more personal care and even medical services. Oftentimes, with medical care there are specialized units for memory care or specific disabilities/illnesses.

Nursing Homes

With a wide range of health and personal care, nursing homes offer more than just assisted living. There is 24-hour supervision and care, meals, personal care, and assistance with everyday living. Part of why they are the most common facility for the elderly is also rehabilitation services (physical, speech, occupational) and extra curriculars that build and maintain community.

Another reason nursing homes are so popular is because they offer long-term and short-term stays especially those who only need short supervision and rehabilitation.

Board and Care Homes

Known as residential care facilities or group homes, board and care homes are smaller facilities with 20 or less residents. Rooms are either private or shared, but staff is available around the clock for personal care and meals. Medical care is off-site.

Assisted Living

Assisted living is for retirees who need daily care, but as much help as someone in a nursing home. These types of facilities typically offer their residents levels of care, where specific levels are more costly. In comparison to nursing homes, assisted living facilities do have fewer residents.

The residents typically stay in apartments or rooms and then shared space is the common areas. With access to daily meals and personal care assistance, certain levels of care offer different services such as medical or housekeeping care.

Continuing Care Retirement Communities (CCRCs)

Referred to as life care communities, CCRCs offer independent living arrangements, but also have assisted living, or skilled nursing care on the same campus. Recreational and healthcare services are also provided onsite.

The biggest plus to a CCRC is you are permitted to live and transfer depending on your needs. Someone who is looking to live somewhere that might offer long-term care services if they need it may want to live here even if they are fully able to live independently now.

21Sep

How to Cover Long-Term Care Expenses

BlogSeptember 21, 2022

Does planning for long-term care seem sensible for your retirement?

The answer: Many will not plan for an LTC until it is too late.

Where do you start?

Paying for Long-Term Care in Retirement

Each option has advantages and risks and knowing these will let you determine what your best plan of action is.

From Retirement Assets:

Without any coverage you will pay for LTC out-of-pocket. For most retirees, this is not the best option. If you are married, there is a good chance you and your spouse will both need long-term care. Essentially doubling your cost in LTC, you may consider shared care if you are married to save on costs.

Traditional Long-Term Care Insurance

This option is all-or-nothing. You either use the benefits or you do no end up using it. However, if you do not use the LTC insurance policy, your family/heirs do not typically see a death benefit payout. As a specialized insurance, you pay to have the insurance company cover out-of-pocket costs for long-term care. With the need for long-term care increasing, over the years policy holders have seen increases in premiums.

Life Insurance Policy with Chronic Care Rider

Life insurance can provide an upgrade. As part of your policy, many life insurance companies offer a rider that will help pay for long-term care. In the case you should need long-term care, your life insurance will pay out a fourth of the death benefit from your policy up to four years. Should you not use all the death benefit for your long-term care, your heirs will receive whatever remains after you pass.

These riders can also apply to permanent life insurance policies that will allow a portion of the policy to be invested; a portion that will grow and may be tax-free upon withdrawal.

Deferred-Income Annuities

While used more as a stream of income, deferred-income annuities may be used as monthly payments to offset the cost of long-term care. In some cases, you may be able to purchase a deferred-income annuity with long-term care coverage or a long-term care rider.

14Sep

What Exactly is a LIRP?

BlogSeptember 14, 2022

Much like a game of chess, retirement planning is about strategy. Back in the 1970s the traditional route was relying on Social Security and having a pension. Today retirement is entirely on the individual to fund—and Social Security only should be about 40% of what you need. And among the various products out there, a life insurance retirement plan (LIRP) can help supplement your income during retirement.

So, what exactly is a LIRP?

A life insurance retirement plan is a permanent life insurance policy that uses its cash value to fund retirement. While mimicking tax benefits of Roth IRAs, any life insurance that is permanent with cash value (i.e. whole life insurance) can be used. However, term life insurance cannot be used as a life insurance retirement plan since it does not have a cash value.

How is the cash value used?

Based on your individual policy, a set percentage of the life insurance policy’s premium payment is put into a tax-deferred savings like an investment account. This becomes known as the cash value of the policy. Over time, the cash value account grows.

Once the account has accumulated a certain amount or has grown long enough, you can access the money by either withdrawing or taking out a loan against it. This money can then be used to provide tax-free income during retirement.

How can you use your LIRP in retirement?

LIRPs are great for supplementing your existing retirement funds. Assuming you max out contributions to traditional retirement accounts, you can put the extra funds into your cash value, creating additional growth. Furthermore, in case of a stock market downturn, having the cash value to pull from is great.

To build your cash value fund pay more than your required premium. Some policyholders chose to overfund their cash value account. Any extra amount paid goes directly into your cash value account and grows tax deferred. However, this strategy only works if you do not make withdrawals before age 59 ½. A cash value policy, if overfunded, can exceed the annual premium limit set by the IRS. Should this happen, it may convert to a modified endowment contract (MEC)—meaning your policy is subject to additional taxes and penalties.

The cash value of your policy can be supplemental income. The beauty of a cash value policy is your capability to withdraw from it. In additional to your traditional retirement accounts and Social Security, your LIRP can be used as supplemental income. This allows for increased retirement spending, should you wish such as a small road trip or to offset if the market has a downturn.

Your policy can be used for long-term care. With a long-term care rider, you may have the option to use the cash value portion of your LIRP to have long-term care covered should you need it. The rider provides coverage from the cash value account if you need to pay for a nursing home, assisted living, or even medical expenses associated with long-term care as you age. A LIRP might not be for everyone, but it could supplement your retirement income, help cover medical expenses, or help take care of a long-term care e