I have worked in the financial industry in Genesee County for a number of years. Our average clientele are hardworking, fun-loving people in their 50s-70s. They know what it means to put in a hard day’s work, and realize that Ben Franklin wasn’t kidding when he said, “A penny saved is a penny earned.” Although there are very wealthy families in Genesee County, this article may speak more to those who fall right in the middle; the “Goldilocks Families” who are not too rich and not too poor, but just right. However, will you be “just right” to fund any skilled care needs in later years? Many people focus on saving for retirement so they can live a life of leisure, travel and spend time doing things they enjoy. These are terrific goals; but they tend to be achieved in the first 10-15 years of retirement.
Lifehappens.org estimates that 70 percent of people over 65 will need some form of long-term care. Further, the national median daily rate in 2014 for nursing home expense was $240/day, and the average stay approximately 835 days. Simple math brings the figure for a typical nursing home stay to over $200,000. People who have worked hard all their lives to enter retirement with $500,000 in assets designed to supplement their pension and Social Security, could essentially end up spending 80 percent of those assets on skilled care for themselves and their spouses. When we fall into this “middle area” of wealth savings, no one is there to take care of you … but you.
What about the government? Currently, if someone is impoverished, the government will pay for long-term care; but this only kicks in with a $2,000 bank or retirement account balance. Per Medicaid.gov, you can keep the house and car, but other assets will disqualify you from government assistance. Again, the “Goldilocks Families” will need to plan for this expense.
- Plan #1: Spend through all of your retirement assets and once you’re broke, the government will step in and take care of you. It may not be the care you expect or in the place you want, but your kids probably don’t need the money, anyway.
- Plan #2: Consider alternative ways to plan for skilled care expenses that may come in the second half of your retirement; after you’ve done all the traveling and spoiling of grandkids.
- Plan #3: Assume your Millennial child is going to strike it rich on the next environmentally friendly energy resource, and plan to live out the rest of your years with him.
As appealing as these options sound, Plan #2 may be the best option. The most common way to plan for skilled care expense is through long-term care insurance. There are quality insurance providers with a number of different ways to insure this potential need. With healthcare costs rising, you will want to lock in your premium costs sooner than later. The most advantageous time to address this expense is during your late 40s-50s. Even if you are in your 60s, it may not be too late to fit it into the budget. At this life stage, you may have had experience with care needed by your grandparents or parents, and have an idea of what to expect.
It may be time to ask yourself the hard question: will you spend the final years of retirement with dignity, leaving a legacy for heirs – or depend on the government to make those decisions for you? Discussing long-term care needs with your financial planner may be worth your time.
800.338.4586 olvinvest.com The Durant 607 E. 2nd Ave., Ste. 100 Flint, MI 48502 jlagore@olvinvest.com Securities offered through Sigma Financial Corporation, member FINRA/SIPC. Investment advisory services offered through SPC, a registered investment advisor. OLV Investment Group is independent of Sigma Financial Corporation and SPC.
