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Does Your Retirement Plan Include Long-Term Care?

Does Your Retirement Plan Include Long-Term Care? Here’s Why It Should and How to Make it Happen


Some financial decisions are pretty cut and dry. If you drive a car, having auto insurance is a given. But what about planning for the costs of long-term care? There’s no way of knowing exactly what you will need, and there are multiple options for handling the costs. Even with this uncertainty, planning ahead for long-term care is just as important as any other financial decision. These tips will help you navigate your options and make a plan that’s right for you.


Mapping Out Your Risks and Options

In order to determine the best strategy, it helps to understand the risk factors that affect what kind of care you may need, such as your health and lifestyle. Your current health, diet and activity level can play a big role in your risk of having an illness or injury that is disabling later in life. The good news is that you can make changes now that impact these health factors and reduce your risk.


Another thing to consider is your family history. You can’t escape your family history, but you can use it to make a more informed plan for care. For example, Retired Brains recommends getting unlimited coverage for long-term care if you have a family history of Alzheimer’s. Additionally, statistics shows that women often need care longer than men.

Along with these risks, you should also familiarize yourself with different types of care because the options include much more than the traditional nursing home. More seniors are also choosing to stay home longer. If this is something you desire, be sure to consider the costs of any home modifications as part of your overall long-term care plan. Even in a nursing facility, some long-term care options are more affordable than others, so this will factor into the costs you can expect.


Options for Covering Costs

Mapping out what kind of care you would want, and communicating that to family members, is only part of the planning process. You also need to know what options there are to pay for care and which one is best for your situation.


  • Use Savings to Self-Pay: One option is to pay out of pocket for long-term care. If you do this, it’s important to save money for this express purpose. Most seniors rely on Medicare for health insurance, which doesn’t cover everything associated with long-term care, but it can help you save on other health-related expenses. For example, you can get coverage for expenses like dental, vision care and prescriptions by enrolling in a supplemental Medicare Advantage Plan. These plans vary based on where you live, but online resources can be extremely helpful for finding the coverage you need in your state.


Along with maximizing health benefits, there are other ways you can make the most of your savings to pay for care. One option is to use money from an IRA, which is advantageous because nursing care can be itemized as a medical expense deduction.


  • Long-Term Care Insurance: If self-paying sounds a little scary, you may want to purchase long-term care insurance. Considering long-term care insurance is often the best option for those who are younger, especially if you’re still in your 40s or 50s, because premiums are higher the closer you are to retirement. The benefit of long-term care insurance is the peace of mind that your savings will be protected in the event that you need costly care.


  • Alternative Options: Long-term care insurance isn’t available or even the best option for everyone. Investopedia recommends several alternative options, such as short-term care insurance and critical-care insurance. These policies may be available if long-term care insurance isn’t an option, and they generally have lower premiums. The drawback is that you run the risk of not being covered for the full amount of care you need.


Everyone’s situation is unique, so what’s right for you may be different for someone else. This is why it’s so important to explore your options and weigh the pros and cons of each. Do this sooner rather than later so you’re ready for whatever the future holds.


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