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The Importance of Early Planning for Long-term Care

You’ve worked hard your entire life. Retirement should be a time to relax and enjoy the fruits of your labor. And yet, because of financial constraints, the majority of American workers aren’t able to plan for retirement, let alone long-term care. (In a 2018 Northwestern Mutual study, 78% of Americans said they were at least somewhat concerned about affording a comfortable retirement.) Too many workers wait until the last minute to think about planning for this chapter of their lives.

What the Future (Probably) Holds

Whether you’re planning to retire in five or 25 years, you’ve probably got a strategy in place to help ensure you make the most of your retirement. There’s a lot to look forward to, and you want to be sure the income and assets you’re counting on for your retirement will be there when you need them. And you will need those assets, because living a long life means there’s a good chance you’ll someday need help with daily activities such as bathing and dressing.

Will you need long-term care? Statistically, there’s a good chance. For most aging Americans, the bigger question is: how will you pay for it?

Someone turning 65 today has a nearly 70 percent chance of needing long-term care at some point, according to the U.S. Department of Health & Human Services. The average cost of nursing-home care was around $7,000 per month, as of 2016, so few families are able to pay out of pocket for necessary services. Even those people who can afford to pay for the first year or two of long-term care may run out of money eventually.

Planning for Long-Term Care

Long-term care insurance can provide resources and help to you and your family, just when you need it most. A well-structured long-term care policy is a powerful tool to complement any retirement portfolio, providing peace of mind today and protection for the future. Without it, you might find yourself with no option but to spend your life savings paying for home health services or residency in a nursing home.

Buying long-term care insurance can help protect what you have worked to save and make sure your standard of living doesn’t go down because you’re spending money on long-term care-related expenses.  As you get older, purchasing long-term care insurance becomes more expensive, so investing in a policy early is the best way to lock in lower cost coverage.

How much coverage will you need? That depends on a number of factors, including your income sources and geographical location. To help you narrow the range of the coverage you may need in the future, ask yourself these questions:

  •      Has a family member ever needed long-term care?
  •      Is there a family history of long-term illnesses?
  •      Does the long-term care policy need to cover the entire expense?
  •      What changes need to be made to your home for long-term care?
  •      How much of your care can be provided by family?
  •      Are you willing to enter an assisted living facility or nursing home?
  •      What assets do you want to pass along?

No one wants to think about needing long-term care, which is one of the reasons you may avoid planning for how you would pay for it. And sure, you could skip the step of buying long-term care insurance and be one of the lucky ones who never needs it – but that’s an awfully big risk to take on yourself. Let a financially stable insurance company take on the risk instead, so you can focus on the present with the knowledge that your future is secure.

There may be no better time than right now to ask yourself if long-term care insurance should be part of your retirement plan. Contact your Sachetta & Callahan financial advisor or our insurance specialist, Andy Reitano, to learn more about your options.