As the Retirement Guys, we talk to people all the time about their concerns as they approach and reach the retirement phase of life.
When asked about their biggest concern, the majority of the time the answer is “not having enough” or “outliving my money.”
It is a fact of life that we all have to figure out a way to support ourselves. It especially becomes concerning when we are reaching the latter phase of life, as our strength and energy begins to diminish.
I (Mark) had the opportunity recently to visit my daughter Caitlyn at Grand Valley State University near Grand Rapids, Mich. She asked me to bring her a small desk that we had at our house toput in her room at the sorority house where she lives.
The desk came in two parts and I was able to get it into the back of my car with no problem.
My wife Lisa said, “You got that in there all by yourself?” Yep. It wasn’t that heavy and with a little extra effort I was able to get the job done.
For some reason, I thought of my late grandfather who lived into his mid-90s. I remember him sitting while people tended to his needs because he had reached a point of not being able to do much. I wondered to myself if I would get to that point someday, where I could not perform the fairly simple task of putting something in the back of my car.
Which brings us back to the concern many have of “not having enough.” Typically, it is the thought of some type of health crisis and worrying about needing long-term health care and how to pay for it.
According to the Department of Health and Human Services, about 70 percent of people older than 65 will require some type of long-term care services during their lifetime.
Let’s look at how we can pay for it. There are basically three choices.
Pay for it out of your own money, buy insurance to help pay for it or rely on the government after you have used all of your own money.
Let’s focus for a moment on the idea of using insurance to pay for it. We ask folks all the time why they do not have this kind of insurance and the typical answers are “it is too expensive” or “we don’t want to pay for something that we might never use.”
The Retirement Guys believe in using insurance to do what we call “leveraging.” Using what we have to create something bigger — in this case, creating a pool of money to use for long-term care.
When you buy a traditional long-term care policy, there are several decisions to make. First, how long do you want it to pay? It is typical to buy a policy that pays for a specific period of time, like five years. The longer it pays, the higher the premium.
Next, how much do you want it to pay? You can pick a daily amount like $200 a day and try to guess how much care would cost and how much you can afford to pay out of your assets or income to make up the difference if your insurance policy does not cover it all.
There is also what is called an elimination period. This is kind of like a deductible. There are a certain number of days that pass before the policy benefits start to pay, say 30, 60 or 90 days.
An inflation rider can be added to your policy to try to keep up with the inflation of care costs. Typically, the benefits are increased by 5 percent per year so that the amount of benefits you purchase today will not be as insignificant in the future as health care costs go up.
To qualify for the policy to start paying, you typically must need help with two of what are called “activities of daily living (ADLs).” These are eating, bathing, dressing, transferring and continence.
Should you buy traditional long-term care insurance? Maybe, maybe not. You should definitely meet with a professional to analyze your situation. If you wait too long, health or age may exclude you from obtaining insurance. There are other creative ways and newer types of nontraditional long-term care insurance products that may help you address this issue.
You can go to www. retirementguysnetwork.com to get more information. Bottom line —
look into it right away.
