You might remember the old song from the group "Chicago," "Baby What a Big Surprise." Here are some of the lyrics
"Baby, what a big surprise, Right before my very eyes, Oh, oh, oh, woah, oh."
The song had nothing to do with getting older and the financial costs and burdens associated with aging. However, usually you want to avoid the big surprises many families face when they don't prepare their family and finances for the consequences of longevity and long-term care.
There are big surprises around the corner that many people, and even their financial advisors, forget about when planning for a successful future retirement. You might prepare for ordinary health expenses, lifestyle, vacations, and legacy concerns. The big surprise many people face but don't prepare for is the cost of long-term care services.
Family Will Face Crisis Management When No Advance Plan Exists
When no advance plan exists, it leads to crisis management. The family becomes responsible for either being caregivers or managing paid care. There is a physical, emotional, and financial burden many family members face when they must become caregivers. If you have to pay for your own long-term care, it can quickly drain assets and adversely impact income and lifestyle. These costs are not cheap, and the burdens impact the whole family!
The fact is most of us will need some type of long-term care service or support during our lifetime. While the majority of people who require extended care are older, we now see many people under age 65 need extended care services.
You Like Numbers? Here are Numbers
Here are some numbers which may surprise you:
- 48%: Percentage of adults who are 65 years or older who will require long-term care services for up to 12 months, 2018 – U.S. Department of Health and Human Services
- 21%: Percentage of adults who are 65 years or older who will require long-term care services for between 2 and 4.9 years, 2018 – U.S. Department of Health and Human Services
- 13%: Percentage of adults who are 65 years or older who will require long-term care services for more than 5 years, 2018 – U.S. Department of Health and Human Services
- 19 years, 3 months: The longest period-of-time a male has received long-term care services from a Long-Term Care Insurance policy, 2 019 – American Association for Long-Term Care Insurance Survey
- 18 years, 1 month: The longest period-of-time a female has received long-term care services from a Long-Term Care Insurance policy, 2019 – American Association for Long-Term Care Insurance Survey
- 5.8 Million: The number of Americans currently living with Alzheimer's disease or dementia, 2019 – Alzheimer's Association
- 200,000: The number of Americans under the age of 65 who have been diagnosed with early-onset Alzheimer's disease, 2019 – Alzheimer's Association
- 4 to 8 Years: The amount of time an individual is expected to live after being diagnosed with Alzheimer's disease, 2019 – Alzheimer's Association
- 8,357,100: The number of people who receive long-term care services from all sources, 2015 – CDC – Long-Term Care Services
- 4,742,500: The number of people who receive long-term care services from home health agencies, 2015 – CDC – Long-Term Care Services
- 1,383,700: The number of people who receive long-term care services in a nursing home, 2015 – CDC – Long-Term Care Services
The need for long-term care services or supports will either happen or it won't. That is perhaps the most critical statistic you should consider as you prepare for your future retirement.
Preparing in Advance Avoids the Big Surprise
No matter what the facts and common sense would suggest, few people prepare for these costs in their retirement plan. The Employee Benefit Research Institute says only 13 percent of those who received professional home health care had long-term care insurance policies in place.
Remember, without Long-Term Care Insurance, you will pay for these expenses out-of-pocket. Often a daughter or a daughter-in-law must provide some of this care. Caregiving is very hard on family members and usually requires them to take time off work creating financial strain, according to the AARP.
People don't plan for long-term care costs for many reasons. Generally, people have one of several fallacies. These include:
- "I will never need care." You can be hopeful, but the longer you live, the more likely you will need long-term care.
- "My health insurance or Medicarewill pay for my care." No, most long-term care will be out-of-pocket unless you have a Long-Term Care Insurance policy.
- "My family will take care of me." No, they have their own careers, families, and responsibilities.
- "I'll buy a policy when I need it." No, you must health-qualify to purchase benefits.
- "Long-Term Care Insurance is too expensive." No, Long-Term Care Insurance is very affordable if you purchase a plan in your 40s or 50s when you still enjoy good health.
Long-Term Care Insurance is the Easy and Affordable Solution
Don't put the big surprise on your family by preparing for the financial costs and burdens of aging before you retire. Safeguard savings and income and reduce the stress otherwise placed on your family.
Save the big surprises for other things and avoid the crisis management that your family would face without an advance plan in place.
You can start your research with some of the tools available on LTC NEWS. One of the tools includes The Ultimate Long-Term Care Guide, which you can read by clicking here.
Forty-five states offer special Partnership Long-Term Care Insurance policies that provide dollar-for-dollar asset protection. These policies offer additional financial peace-of-mind. See if your state offers these policies by clicking here.
Experts suggest seeking the help of a qualified Long-Term Care Insurance specialist. Be sure they work with the major insurance companies and fully understand underwriting requirements, policy design, claims, and know the difference between traditional, partnership, and asset-based plans. Find a specialist by clicking here.