A lot of attention is being paid to the current restructuring of national healthcare legislation. And the very mention of long-term care is often seen as an uncomfortable topic of discussion. But with roughly 10,000 Baby Boomers turning 65 every day from now until 2030, the future costs of health care in general, and in some cases long-term care, should be a top concern of current and soon-to-be retirees.
Unless you prepare very well with an educated and very realistic expectation of what will be needed to live comfortably in your retirement years, the chances of coming up short with your retirement savings are quite high.
A government analysis recently found that average Americans between the ages of 55 and 64 have saved only about $100,000 for retirement. That is actually not a lot when you realize that sum would translate into about a $300 monthly payment if your money were invested in a lifetime annuity.
So, how seriously should you consider getting some kind of insurance to cover long-term medical needs in case big Medicaid cuts are on the horizon?
Long-term care insurance is one of the more complex types of insurance on the market, but it could save you from falling into a money pit if you ever need it. And you just might need it too. Nearly 70 percent of Americans 65 and older need long-term care at some point, according to the U.S. Department of Health and Human Services.
Another important thing to consider is that having an alternative safety net at your disposal (investments for example) will offset the potential costs of long-term care. Think of it as a savings account for the out-of-pocket costs that may be incurred during a scenario where long-term care is required.
Another option is life insurance that offers a long-term care benefit. If you don’t need it, your heirs get money when you die. This is something that is gaining traction in the financial services world - a “hybrid insurance.” It’s life insurance with a long-term care rider that allows you to use that money for health care if you need it. “Whatever you don’t use gets passed along to your family after you pass away. You can pay for it either all at once or over the course of 10 years or so.” Says Daniel Lerner, Executive Vice President, Investor Services at David Lerner Associates.
Considering that long-term care insurance policies are some of the more complicated ones that you may encounter, this hybrid product may be just the ticket to simplify the process.
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.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
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.