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As the life expectancy
continues to increase, the need for long-term custodial care
has become the biggest financial risk today’s retirees face.
There are ways to protect your lifestyle and the inheritance
you leave your children if you act before it’s too late.
In the 1930’s, just over 50% of men in our country lived to
the age of 65. Today, those who reach the age of 65 can
expect to live another 20 to 30 years. The shear numbers of
seniors is rapidly increasing, as well. Currently, there are
around 26 million Americans over the age of 65. By the year
2020, that number will reach over 76 million, representing
over 25% of the U.S. population.
That means today’s retiree has to be prepared to not only
cover normal living expenses for decades after retirement,
but increased health care costs as well. The cost of
long-term custodial care, when needed, will be the most
expensive uninsured health expense you can incur. In fact,
long-term custodial care cost would completely deplete the
typical retiree’s nest egg within twelve months. This is a
serious risk because there’s a 40% chance that each of us,
one day, will require that sort of care before we die.
Despite the high costs of long-term custodial care and the
high likelihood that we’ll one day need it, most are grossly
misinformed on the subject. The number one misconception
concerning long-term care is the belief that Medicare,
Medicaid or a Medicare supplement policy will pay for
custodial care. They don’t.
Medicare only covers costs associated with skilled nursing
care and then only after a three-day hospital stay. Skilled
care refers to care requiring on-going treatment by a
physician or registered nurse.
The vast majority of care that seniors need is custodial
care, not skilled nursing care. Custodial care covers help
with bathing, eating, or getting dressed. If someone is
unable to move from their bed to a chair or to use the
restroom on their own, they are in need of custodial care.
This type of care does not require the help of a physician
or registered nurse. Therefore, Medicare nor Medicare
supplement policies do not cover these expenses.
Medicaid, however, does cover custodial care, albeit at a
level of quality you may not desire. Medicaid is welfare. It
is only for the indigent—if you have more than $2,000 in
assets you don’t qualify. Medicaid can even put a lien on
your house so it can be sold at your death and the proceeds
used to help defray the amount the government spent on your
health care.
This brings up an important point concerning expenses
associated with long term custodial care. The very poor need
not worry about these expenses, because the government will
take care of it. The very wealthy need not worry, because
they have enough resources to obtain excellent custodial
care.
The ones who need to be concerned are the vast majority of
seniors who are neither impoverished nor extremely wealthy.
You aren’t below the poverty level, but you’re not a
multi-millionaire, either. Those in this category need to
take active steps to make sure that any long-term care you
or your spouse will need won’t decimate your finances and
put an undue burden on your family.
That’s where long-term care insurance comes in. These
policies will help cover custodial care provided in your
home, an assisted living facility and a nursing home. A
long-term care insurance policy will help you maintain your
independence. You’ll be able to stay in your own home longer
and won’t have to move in with your kids. You’ll be able to
better afford the kind of care you want without having to
worry about being an emotional or financial burden on your
family. And you’ll still have an inheritance to pass on to
your loved ones.
You must qualify in order to obtain Long Term Care
Insurance. So it is important that you get Long Term Care
Insurance while you are still active and healthy. Though it
may seem expensive, it will protect you from the biggest
financial risk you will face during retirement.
If you’d like free, clear, unbiased advice submit your
questions to www.guardingyourwealth.com/askjeff.htm.
Mr. Voudrie is a Certified Financial Planner, nationally
syndicated newspaper columnist and President of Legacy
Planning Group, Inc., a Private Wealth Management Firm in
Johnson City, TN. He can be reached toll-free at
1-877-827-1463 or at
jeff@guardingyourwealth.com. |
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