Planning for retirement should be high on your priority list. Contributing money to your employer's 401(k) plan, if available, is priority one, according to most experts. Additionally, some people will contribute to an Individual Retirement Account (IRA) as well.
Some people have an employer that offers a defined pension. No matter, we all work hard now to have an enjoyable and long retirement in the future. With life expectancy increasing, it becomes even more critical to not only put away money for your 'golden years' but to protect your retirement savings as well.
You want to have enough income and savings in retirement to maintain your lifestyle. However, as we get older, we face health challenges, including Alzheimer's and dementia, which can dramatically change your future retirement's financial dynamics.
Every three seconds, someone in the world develops dementia. While Alzheimer's is the most common form of dementia, many forms of dementia and other health issues impact our memory.
People require long-term health care due to deteriorating health due to an illness, accident, or the consequences of aging. Many families are unprepared for the physical, emotional, and financial impact of long-term care on family and finances.
One of the most significant risks to our retirement savings is long-term health care costs. Not having a plan for the financial costs and burdens of aging can be the single biggest devastator of a financial plan.
Long-Term Care is Both a Cash Flow Issue and Family Issue
The consequences of long-term care are both a cash flow issue and a family issue. Family members are often forced into the role of being a caregiver when no advance plan exists. Family caregivers are usually untrained and unprepared for this demanding job. The family goes into crisis mode. Yet, too many people ignore the problem until it becomes a crisis.
The financial costs and burdens of long-term care will impact your income, savings, lifestyle, and legacy. You and your spouse are directly affected, but your family faces many challenges when you fail to plan.
As you get older, memory loss looms large, in addition to the many physical and health issues that lead to long-term health.
The Alzheimer's Association says 1 in 3 seniors will die with some form of Alzheimer's or dementia. In 2019, more than 16 million caregivers in the U.S. provided 18.6 billion hours of unpaid care. Unpaid dementia caregiving was valued at $256.7 billion in 2020.
Family Caregivers Untrained and Unprepared
The consequences of family caregiving happen since many people don't have enough or exhaust their savings requiring a spouse or family member to become a caregiver. The burden on these unpaid caregivers is physical, emotional, and financial. Usually, this care is provided by a daughter or daughter-in-law. This 'Sandwich Generation' is burdened as they work and raise a family while dealing with long-term care for their Mom or Dad.
The average worker who takes time off to provide care for an aging parent sacrifices more than $300,000 in lost wages and benefits over a lifetime, says Sandra Timmermann, a gerontologist, and director of the MetLife Mature Market Institute, as quoted in Kiplinger's.
“You lose the accumulation of the money you could earn; you lose your 401(k) match; you lose your benefits and health insurance; and you may not be able to find a job again when you want to get back into the workforce.”
Sandra Timmermann, a gerontologist
There are now 53 million unpaid, untrained, and unprepared family caregivers. The job is demanding - Unpaid Family Caregivers Now Total 53 Million People | LTC News
An AARP survey said 55% of these caregivers admitted to being overwhelmed. That same survey said 68% used some of their own money to help provide care, and 39% said they became financially strained due to taking time off work, family leave, or other issues.
Long-Term Care Insurance Risk Increases with Age
The U.S. Department of Health and Human Services says there is over a 50% chance you will need help with at least two activities of daily living or need supervision due to memory loss. Knowing these facts having a plan that addresses this risk is key to a balanced retirement plan.
Merrill Lynch suggests purchasing Long-Term Care Insurance to protect assets and avoid placing your children from becoming part of the 'Sandwich Generation' dilemma. They say to keep in mind that it costs less to buy Long-Term Care Insurance when you're younger since premiums are based on age and health at the time of application. You must enjoy reasonably good health to obtain coverage, and your health is always better when you are younger.
In fact, most people purchasing LTC insurance do so as part of their retirement planning. Once you have substantial health issues, it is probably too late to plan. However, every insurance company has its own underwriting rules, so be sure to speak with a Long-Term Care Insurance specialist who understands each company's rules.
About 5.8 million Americans are living with Alzheimer's disease, according to the Alzheimer's Association. Without the development of medical breakthroughs that prevent, slow, or stop the disease, by 2050, the number of people with Alzheimer's disease could reach 13.8 million. Other estimates suggest that number could be high as 16 million.
Long-Term Health Care is Expensive - Alzheimer's Care Even More
Out‐of‐pocket spending continues to increase for the care required for those who have Alzheimer's and other types of dementia. This care cost is expected to run $66 billion in 2020, or 22% of total payments. Medicare and Medicaid will cover $206 billion, or 67%, of the total health care and long‐term care payments for people with Alzheimer's or other dementias.
Medicare only pays a limited amount of skilled care associated with memory care. Only Long-Term Care Insurance will pay for all types of long-term care related to any type of dementia.
The American Association for Long-Term Care Insurance (AALTCI) says in 2021, LTC Insurance paid over $12.3 billion in just one year in claims, many of those due to memory loss. That number will also climb as people with LTC Insurance policies get older.
Most people obtain coverage in their 50s. Experts suggest seeking the help of a specialist in Long-Term Care Insurance to make sure you have the correct benefits and pricing based on your age and health.
About the Author
An LTC News author focusing on long-term care and aging.
Contributor since August 21st, 2017
Your body, health, and mind will change in the next 20+ years. Consider the physical, emotional, and financial burdens placed on you and your loved ones as you get older.
The solution is affordable Long-Term Care Insurance. LTC Insurance provides guaranteed tax-free benefits to access your choice of quality care options, including care at home. You will be able to protect income and assets and reduce the stress and anxiety otherwise placed on loved ones.
Planning Tools and Resources on LTC NEWS
You can find many tools and resources on LTC NEWS to assist you in your research for a planning solution or help your family find the appropriate care for a loved one at the time of crisis.
To help you plan the costs and burdens of changing health and aging, LTC NEWS has put in place several resources, including:
- The LTC NEWS Cost of Care Calculator will show you the current and future cost of long-term health care services where you live. Plus, each state has vital state-specific information you should know - Cost of Care Calculator - Choose Your State | LTC News
- The Ultimate Long-Term Care Guide is an outstanding read to help you get a good overview of the topic area.
- Compare the major insurance companies that offer Long-Term Care Insurance products here - Top Insurers for Long-Term Care Insurance | LTC News.
- A detailed tax guide that includes available tax incentives can be found by reviewing the Long-Term Care Tax Benefits Guide.
Find all the resources on LTC NEWS - Resources for Long-Term Care Planning | LTC News.
Seek Professional Guidance
Insurance rates are regulated, so no insurance agent, agency, or financial advisor can give you special deals. However, premiums vary over 100% between insurance companies for the same coverage.
Experts suggest using a qualified Long-Term Care Insurance specialist to help you navigate the many options available to you and your family.
A specialist who works with the top companies can match your age, health, family history, and other factors and find you the best coverage at the best value. A specialist will save you money, and you will have peace of mind knowing they are making the appropriate recommendations - Work With a Specialist | LTC News.
Get Expert Help Filing an LTC Insurance Claim
LTC NEWS provides free assistance with no obligation to help you or a loved one complete the claims process with your Long-Term Care Insurance policy.
You can also get support in finding quality caregivers and get recommendations for a proper care plan, whether a person has a policy or not. - Filing a Long-Term Care Insurance Claim | LTC News.
Benefits of Reverse Mortgages
Today's reverse mortgages for those aged 62 and older could be an ideal resource to fund a Long-Term Care Insurance policy OR even provide money to pay for care if you, or a loved one, already needs help and assistance.
Some people have much of their savings invested in their homes. With today's reverse mortgages, you can find ways to fund care solutions, care itself, even help with cash flow during your retirement.
Learn more by asking questions to an expert. LTC NEWS columnist and host of the TV Show "62 Who Knew" will answer your questions regarding caregiving, aging, health, retirement planning, long-term care, and reverse mortgages.
- Just "Ask Mike." - Reverse Mortgages | LTC News.
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