Long-Term Care and Retirement
Many Americans are under prepared for retirement. Nearly half of families have no retirement account savings at all. And the average retirement savings of all families is less than $100,000.
But that number doesn't tell the whole story. Since so many families have zero savings and since super-savers can pull up the average, the median savings or those at the 50th percentile, may be a better gauge. The median for all families in the U.S. is just $5,000, and the median for families with some savings is $60,000.
Not only that but have you considered what you would do if you were hit with an additional half million dollars in health care costs? Would you be able to still maintain a comfortable retirement? It’s highly doubtful that even the better off among us could withstand that.
Forbes magazine called this the “Wildcard that could destroy your retirement.” Time called it “The retirement crisis nobody talks about.” Those are quite serious statements.
Long-term care insurance could help offset these costs. If you became disabled and needed daily help, you’d need extra money for that assistance, and Medicare doesn’t cover it.
Here are some things to keep in mind:
70% of people over 65 will need some form of long-term care at some point. For married couples, the chance that one spouse will need long-term care rises to 91%. People living alone are more likely to need some sort of home health care. Women outlive men, and thus, are more likely to live alone and need some sort of home health care.
No wonder so many people are worried that they won't have enough money to cover health care costs in retirement, let alone make it through retirement in the lifestyle to which they are accustomed. It becomes clear that after considering these things long-term care insurance becomes almost a necessity rather than a luxury.
The problem is that it’s expensive, because the risk is high for the insurance company. As people live longer, there is a much greater chance that they will need the benefit at some point, and that they will need it for longer periods.
But if you are smart, you owe it to yourself to investigate the options, and make an informed decision on the subject. Starting early, limiting years of coverage, and accepting longer elimination periods before coverage kicks in will all help in keeping premiums tolerable. And the bottom line is that you really don’t want to have an unfortunate turn of events ruin your retirement, or indeed your life.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
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David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.