How to Plan for Long-Term Care (For You and Your Parents)

For most people, planning ahead for their future long-term-care needs ranks right up there with thinking about pre-paying funeral expenses – it’s a task you just don’t want to do, or even think about for that matter.

But think about it you must, because there is a very possible chance that you will need long-term care at some point, whether recovering from an accident or illness in a short-term rehab facility, receiving nursing and personal-care assistance in your home, or transitioning to nursing-home living. The odds that you’ll require that type of care someday increase exponentially as you age.

That’s why at PAX Financial Group we encourage our clients to have a plan for their long-term care, regardless of age. While many people tend to put this off until “later,” the best time to think about potential needs and expenses is long before you actually need long-term care. This way you have time to consider your risk, do some research, compare long-term insurance plans, and find out what services will be available to you and how much they cost.

Financial planning is important, and long-term care should be a part of that discussion.

Will You Need Long-Term Care?

According to the National Institute of Health, although it’s hard to accurately predict exactly what or how much long-term care you might need, there are a number of factors you can take into consideration that may impact your long-term care needs. For example:
  • Age
  • Gender
  • Marital status
  • Lifestyle
  • Health and family history

Your financial future can be tremendously affected by long-term-care costs you didn’t see coming, not just for you, but for your children. (Read our recent blog post: Planned Financial Services for the Sandwich Generation.) Talk to the PAX financial advisors in San Antonio, Texas about what makes sense for you.

Do you have a plan for your long-term care? Contact PAX Financial Group and get the conversation started.

Housing Decisions

One of the biggest long-term-care expenses and the first thing to think about when you start planning is where you’ll live when you’re unable to fully care for yourself.

It’s not surprising that many people want to remain independent and stay in their own homes for as long as possible, but this isn’t always the most feasible or sustainable option in the long-term for obvious reasons.

When a person develops an ongoing medical condition, has a serious disability or becomes frail with age and requires more advanced care than they can receive at home, it may be time to transition to a skilled-nursing facility. Do you know how you’ll pay for that?

Paying for Long-Term Care

Many long-term-care expenses are not covered by regular health insurance or Medicare. AARP estimates the average out-of-pocket costs is about $140,000, and the median annual cost of a semi-private room in a nursing home was $93,075 in 2020, which would take an enormous bite out of most people’s retirement savings. That’s why there’s long-term-care insurance, though many Americans don’t have coverage.

When considering your long-term-care needs, these blog posts may help:

Everything You Need to Know About Retirement Healthcare

Medicare FAQs: PAX Financial Group Answers the Most Common Questions

Long-Term-Care Insurance Options

There are 2 types of long-term-care insurance to help you pay these costs, should you have them someday: Traditional standalone long-term-care insurance policies and whole life insurance.

With traditional long-term-care insurance, you’ll pay an annual premium for coverage that kicks in if you ever need help paying for nursing-home costs, personal care or other care services. A typical policy would cover $160 daily toward nursing home expenses. The average annual premium in 2021 for a married couple 55 years old, based on initial benefit amount of $165,000, is $2,080; for a married couple 65 years old, it’s $3,750.

Whole life insurance is a hybrid policy that has cash value. It’s more expensive than traditional long-term-care insurance, but you can withdraw funds or take a loan against the policy to pay for long-term-care expenses. If you end up not needing long-term care, the policy will return money to your heirs. It also doesn’t come with the risk of rate increases that traditional long-term-care insurance carries. You lock in your premium rates when you take out the policy. The premiums for whole life insurance can cost two to three times more than traditional long-term-care insurance premiums.

Whichever type of insurance you choose, time is of the essence. Premiums start to increase drastically as you get older or as your health declines. Start looking at different policies early! The financial advisors at PAX Financial Group can help you understand your options and decide which best fits your needs. For more on what this looks like, click here.

For Your Aging Parents

While the subject of long-term care is fresh in your mind, make sure to extend the discussion to your parents and ask them about their plans and wishes. If they already have a plan and insurance, ask them to share the specifics and let you know where important documents are kept. If they intend to stay at home, let them know you will honor their wishes as long as possible, but don’t make promises you can’t keep.

If your parents don’t have a plan for their future long-term care, now is your chance to start the conversation. Offer compassionate guidance and resources to help them make decisions for their care. For help, read our recent blog post: 5 Questions to Ask Elderly Parents.

What You Can Do

Maintain healthy habits now.

Don’t just rely on your long-term-care insurance for your health and well-being in later years. After a clearly defined long-term-care plan, the next best thing you can do is to take good care of yourself now. Talk to your doctor about ways you might maintain or improve your health and lifestyle, and maybe you can delay the need for long-term care or avoid it altogether.

What We Can Do

At PAX Financial Group, we are equipped to help clients explore their insurance needs. As financial advisors in San Antonio, Texas, our team has helped many families plan for these often-uncomfortable situations. If you’re lucky, you’ll never need long-term care and your planning and insurance will have just been a safety net. But if you do need it, you’ll be happy you have a plan in place.

The first step: Get the conversation started. It may not be your favorite topic of discussion, but it’s an important one!

This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.

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