Planning for Retirement – Smart Choices Part 4

RECAP:  Smart Choice #3

Consider all your options for healthcare during retirement and how you plan to cover the expense if you retire before age 65.


Smart Choice #4 addresses one of the largest risks that can derail your long-term retirement plans – the need for some sort of long term care later in life.  Statistically speaking, half of those that make it to age 65 will need some form of long term care during their lifetime.  These services range from home health care to assisted living to skilled nursing care.

What are your options for addressing long term care expenses?

  • Long term care insurance: This type of insurance is typically used to pay a daily rate for home health care services or skilled nursing.  Years ago, “ten-pay” policies let a client pay equal level premiums for ten years, with no obligation to pay any premium after that point.  Most often those policies, had 30–60 day elimination periods, no cap on lifetime benefits, and 5% cost-of-living adjustments on the daily benefit.  All with reasonable premiums.  Those days are no more.  As life expectancy has increased, along with the number of policyholders ready for long term care, insurance companies have had a more difficult time paying the benefits on these policies.
  • Medicare does not cover long term care expenses, but Medicaid will, often as a last resort. In North Carolina, specifically, you have to spend down the majority of your assets in order to qualify for Medicaid care.  This often leaves your spouse or partner with meager financial assets for their retirement.
  • Reverse mortgages are another tool to use for long term care expenses. This type of mortgage allows you to use the equity in your home to provide a monthly income.  Be aware that once you pass away, the bank owns your home, and it does not pass to your heirs.
  • With the increases in the cost of care, many people have had to find alternatives to long term care expenses. Many move in with their children or other family members and form a multi-generational household.  Co-housing with like-minded people is another option.  We see women especially willing to live in cooperative housing where everyone takes care of each other, sharing in expenses and responsibilities.

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Any opinions are those of Jennifer Adams and not necessarily those of RJFS or Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. The cost and availability of Long Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of Long Term Care insurance. Guarantees are based on the claims paying ability of the insurance company.