Easy Way to Have Half a Million or More in Tax-Free Benefits in Retirement

Boosting retirement savings now can provide greater financial security, promoting a more enjoyable and worry-free retirement. A solid nest egg ensures you can fully embrace the golden years with fewer financial constraints.

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Easy Way to Have Half a Million or More in Tax-Free Benefits in Retirement
4 Min Read June 8th, 2023

How much money do you have in your 401(k), IRAs, and other savings? Will you have enough money to retire so you can actually enjoy your future retirement?

According to a recent Employee Benefit Research Institute survey, the average household retirement savings is about $100,000. However, experts recommend that retirees have about $1 million in savings to maintain their standard of living in retirement.

Achieving $1 million in retirement savings isn't an arbitrary goal, and here's why:

Rising living costs, projected to continue their upward trend, necessitate higher retirement funds for future retirees to cover their expenses. Social Security benefits are insufficient for most people's living costs. The Social Security Administration reports that about 40% of retirees depend on Social Security for more than half of their income. 

Additionally, many retirees must finance long-term health care, like in-home care, assisted living facilities, memory care, or nursing homes. Regardless of your retirement savings, these funds will supplement Social Security to provide your income upon retirement.

Do You Have All Future Expenses Covered?

What if long-term health care is necessary? Funding sources and potential impacts on lifestyle and family must be considered. Health insurance, including Medicare, typically doesn't cover long-term care; except for limited skilled services, the financial responsibility falls on the individual. Medicaid only becomes an option with minimal income and assets.

Self-funding long-term care poses a challenge unless individuals have multimillion-dollar resources. Even then, most wouldn't want to navigate the tax complexities associated with self-funding. Long-term care costs can rapidly drain savings, leading to several issues, including:

  • Lowered retirement income: Paying for long-term care reduces assets, which in turn decreases income. This reduced income might necessitate lifestyle changes and complicate maintaining your standard of living in retirement.
  • Lifestyle changes: Long-term care often necessitates significant lifestyle adjustments. A spouse might need to maintain their lifestyle despite the care recipient's changing needs. Maintaining a preferred lifestyle remains important regardless of the amount of care you need.
  • Impact on spouse and adult children: Long-term care needs can significantly affect your spouse and adult children. These relatives may have to assume caregiving responsibilities, which can be both time-consuming and emotionally taxing. An older spouse or adult child might feel hindered from enjoying their life due to their caregiving duties. They might also need to financially contribute to your care, potentially straining their finances.

An Extra Nest Egg? Can It Be Achieved?

Imagine having an extra $250,000, $500,000, or even more in tax-free funds to cover quality care expenses without altering your lifestyle or imposing on your family. Long-Term Care Insurance can make this possible, and for most individuals, the premiums are reasonably priced.

You can accomplish this goal with Long-Term Care Insurance - How Much Does Long-Term Care Insurance Cost?

Let's say you are age 55 and your spouse is 52. An affordable shared benefits plan could provide you and your spouse with over $500,000 in tax-free benefits for long-term care at age 80 for under $350 a month (depending on the insurance company and health.)

Need a lower premium? Sure, the benefit design can be adjusted to fit your budget and desired benefits. Plus, if you live in a partnership state with a Partnership Long-Term Care Insurance policy, you get additional dollar-for-dollar asset protection.

What is a Partnership Long-Term Care Insurance Policy?

It frees up your savings, giving you enough money to enjoy your "golden years." Since you cannot avoid aging and the consequences of chronic health, frailty, dementia, and mobility problems, LTC Insurance is a perfect partner for your retirement and better than the lottery ticket you thought about buying.

One Million Dollars Nice Goal

That million-dollar nest egg is still an admirable goal; two or three million is even better. However, no matter what level of savings you have achieved, extra tax-free benefits to pay for long-term health care adds peace of mind, access to quality care, maintain lifestyle, and reduce stress and anxiety otherwise placed on loved ones. 

As you embark on your retirement planning journey, consider these crucial steps. Begin by amplifying your contributions to retirement savings accounts. Next, procure an affordable Long-Term Care Insurance policy, ideally in your mid-adulthood. Additionally, contemplate extending your working years. Lastly, think about downsizing your home. 

Consider these additional tips when planning your retirement savings:

  1. Commence your savings journey early. The sooner you start, the more your money can compound over time.
  2. Utilize employer-sponsored retirement plans. This often comes with matching contributions, effectively translating to free money boosting your retirement fund.
  3. Invest your retirement savings astutely. With a plethora of investment options, it's crucial to select those aligning with your age, risk appetite, and financial aspirations.
  4. Regularly recalibrate your portfolio. As retirement approaches, your investment strategy should shift towards a more conservative stance.
  5. Regularly review and adapt your retirement plan. Ensure you're on track to achieve your goals by routinely monitoring your progress and making necessary adjustments.

Taking a proactive approach, including adding LTC Insurance today, ensures a more secure and enjoyable retirement tomorrow.

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About the Author

An LTC News author focusing on long-term care and aging.

LTC News Contributor James Kelly

James Kelly

Contributor since August 21st, 2017

Editor's Note

Securing a Long-Term Care Insurance policy with guaranteed tax-free benefits of $250,000 or more substantially simplifies retirement planning. This type of policy not only bolsters your financial resources but provides peace of mind, knowing that a significant portion of potential care costs are covered, irrespective of what happens in the future.

Having such coverage ensures that you won't have to worry about drastically depleting your savings or altering your lifestyle to fund your future care. Instead, the LTC Insurance policy kicks in, providing the necessary financial support and access to your choice of quality care without impacting your accumulated retirement funds. This advantage allows you to maintain your planned standard of living in retirement without the stress of additional unexpected costs.

Moreover, this type of insurance policy provides more than just financial benefits. It plays a crucial role in preventing emotional and financial stress on family members who otherwise might be responsible for caregiving or figuring out how to finance your care.

Having an adequate Long-Term Care Insurance policy provides a sense of security for you and your loved ones, who may otherwise become responsible for your future care.

In essence, a Long-Term Care Insurance policy can be a key component in a well-rounded retirement plan, protecting your assets, safeguarding your lifestyle, and ensuring you are well-prepared for the costs of long-term care when you need it as you get older.

LTC Specialists are Key Get Proper Coverage at the Lowest Cost

LTC Insurance is custom designed, but premiums vary dramatically between insurance companies. Every insurance company must file its products and pricing with the state's insurance department prior to being offered to consumers. What that means is no insurance agent or agency can offer special deals. 

Seeking professional help is vital when shopping for Long-Term Care Insurance. There are not many Long-Term Care Insurance specialists who work with the top companies and have a complete understanding of underwriting, policy design, pricing, claims, partnership, and other important aspects of LTC Insurance.

Look for some of these factors in finding an LTC Insurance specialist:

  • An LTC Specialist will usually have helped at least 100 people or more with LTC Insurance. Be sure to ask; some specialists have helped thousands nationwide.
  • An LTC Specialist will typically work with most of the major insurance companies offering these products, not just one or two.
  • An LTC Specialist will typically have years or more of experience and hold a Certified in Long-Term Care® designation (CLTC®).
  • An LTC Specialist will understand the current and future cost of long-term health care and how most care is delivered so they can make professional recommendations without "over-insuring" the individual. 
  • An LTC Specialist will offer all types of long-term care solutions, including traditional (including Partnership plans), asset-based "hybrid" policies, and short-term cash indemnity policies. 
  • An LTC Specialist will know the underwriting rules with all the major insurance companies so they can match your age, health, family history, and other factors to provide you with accurate quotes.
  • An LTC Specialist will typically have firsthand experience helping a client's family in the claim process.

Most people obtain coverage in their 40s and 50s.

Available Tools and Resources on LTC NEWS

LTC NEWS offers news, guidance, and resources to assist you in long-term health care planning. Additionally, LTC NEWS provides reviews of various Long-Term Care Insurance plans. 

Here are some of the resources that are available on LTC NEWS:

Parent’s Health Declining? Do They Need Care Now?

Get quality care for your parent or parents if they require it. LTC NEWS can assist. We've put together a few comprehensive guides to help you along the way.

Find help locating quality caregivers or long-term care facilities and get recommendations for a proper care plan, whether a person has a policy. - Filing a Long-Term Care Insurance Claim.

Make sure your loved one uses their Long-Term Care Insurance if they are fortunate enough to have it. Families sometimes postpone taking advantage of the benefits thinking family members can provide care, saving the benefits for later when it is deemed "more necessary."

Delaying the use of available Long-Term Care Insurance benefits is not a good idea. The policy provides you with access to quality care when someone needs it. It also gives loved one’s time to family instead of caregivers.

These guides can be very helpful as you try to find appropriate long-term care services for a loved one:

Today's Reverse Mortgages Can Benefit Older Families

Some people have a large portion of their savings in their homes. With the help of reverse mortgages, you can find ways to pay for quality in-home care, pay for LTC Insurance, and even assist with cash flow during retirement.

Yes, today's reverse mortgages may be the perfect way to pay for a Long-Term Care Insurance policy or even cover the cost of in-home care if you or a loved one is currently in need.

Asking an expert with your questions will help you learn more. Mike Banner, a columnist for LTC NEWS and the host of the television program "62 Who Knew," will respond to your inquiries about long-term care, reverse mortgages, aging, and health.

- Just "Ask Mike." - Reverse Mortgages | LTC News.

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Email your story idea or article: newsroom@ltcnews.com - LTC News Contributors | LTC News

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