Four Things to Include in Your Long-Term Care Plan
Most people plan to live a long life, but not everyone has a plan for if they do live a long life. Personal finance experts say that within your retirement budget, money should be allotted for a long-term care plan. That is, a strategy to help you manage your day-to-day living if you become infirmed. Ten thousand baby boomers turn 65 years old every day, and 7 out of 10 Americans will eventually need long-term care services. So what should you include in your long-term care plan? Here are four things to consider.
Your home. If you own a house, think about what you'll do with it when you get older. Sell it and use the money for retirement? Stay put? And if you plan on remaining in your home, will it be senior-friendly? "We hear a lot of people saying that they want to retire and move somewhere warm, or that they're going to live on the beach, but the majority of people are going to age in the home where they had their family," says Bill McManus, director of strategic markets at Hartford Funds, an asset management firm headquartered in Radnor, Pennsylvania. "And what does that look like, aging in place? Will you need to modify an entryway for a wheelchair, or does that bathroom need to be modified so it's handicap-accessible? That can be a big cost that not everyone is prepared for."
Transportation. This, too, needs to be in your long-term care plan. After all, if you can't drive yourself around your community, someone will have to, whether it's a family member or a cab driver. "Transportation is often the No. 2 expenditure," McManus says, following rent and mortgage. "You need to think about how you're going to access the things you want to access. Will I have the ability to go two miles down the road and get an ice cream cone if I want to do that? Transportation equals freedom."
A support network. With any luck, you won’t have to go through old age alone. You're going to have people to help you get through the tough times, including: Family members. Not only can they give you actual care and moral support, they can help you assemble the rest of your team that will get you through any times of poor health. A power of attorney. This could be a family member, a friend or even an attorney. But you need someone you deeply trust who will have legal permission to take care of your monetary and medical issues, from paying your bills to deciding what medical care you should receive if you aren't able to make those decisions. An attorney. If you have a lot of assets to potentially spend down or lose if you become infirmed, consider hiring a certified elder law attorney, suggests Catherine Brennan, director of patient accounts at UPMC Senior Communities, which provides living options for seniors in 12 locations in the Pittsburgh area. "This is important, especially for residents who may enter a skilled nursing center for the remainder of their lives," she says. She adds that a lot of families don't seek a lawyer and attempt to transfer assets to protect their inheritance, but they wind up hurting their loved one's ability to get benefits from federal and state programs designed to help them. A social network. Facebook might take away some of the isolation an elderly person may feel, but you're going to need people who can come by and check on you and help with the little things that were once easy to manage. Things from planning meals to changing a light bulb.
Money for care. If you have kids that live nearby, they'll hopefully come over once in a while free of charge. But if you need care from a skilled nursing facility, that may cost you. Or maybe Medicare or Medicaid will help you. But maybe not. Medicare is very limited in what it covers, and Medicaid essentially requires you to be impoverished. The point is you should be thinking about the money you may have to outlay if you need long-term care. According to LongTermCare.gov, a website run by the U.S. Department of Health and Human Services, on average, it costs $205 a day or $6,235 a month for a semi-private room in a nursing home. If you want a private room, that will run $229 per day and $6,965 a month. For assisted living, you might pay $3,293 a month for a one-bedroom unit. Hiring a home health aide to come to your home costs an average of $21 an hour. Keep in mind that those are figures from 2010, and they are going up. In fact, Ball says that as baby boomers continue to get older, and the demand for services like skilled nursing care continues to increase, the costs are likely to go way up.
You may want to get long-term care insurance, which would pay for your medical bills if you need long-term medical care, like in a hospital or nursing home, for a lengthy period (usually over 90 days). Then again, long-term care insurance may not be for you. If you're beyond rich, you probably have the money to cover a lengthy hospital or nursing home stay. If you're broke, Medicaid will likely take care of you. Long-term care insurance is really a vehicle for the middle class, but even then, it’s something to carefully consider.
"Consult your trusted advisors," says Mark Bondi, president of Sherwood Oaks, a continuing care retirement community in Cranberry Township, Pennsylvania. "Some companies have had financial problems recently, so it's critical to vet the company behind the policy thoroughly. I've seen many policies and all are different, so please make sure you understand what you are buying.” When should you start crafting a long-term care plan? That's hard to say, since everyone's health is different. Still, it's hard to argue with Bondi when he says: "The best time to plan is before your health spirals down. Since no one knows exactly when this will be, it's never too early." By Geoff Williams