Wealth Logic Solutions

We can’t predict the future, but we can prepare for it. In fact, many people utilize 401(k) or Roth IRAs to save for retirement. Most people, however, don’t consider their need for long term care and what could happen to their retirement savings if they don’t plan for it.

Long term care insurance coverage assures that you are cared for should you need assistance with activities of daily living and, at the same time, protects your retirement savings from being depleted for such care.

With life expectancies and health care costs on the rise, and with the uncertainty of government assistance in the future, we all face the likelihood of the need for long term care for our parents, as well as ourselves. Consider these facts from the U.S. Department of Health and Human Services (January 2007):

* 60% of people over age 65 are expected to need some form of long term care.

* 40% of those receiving long term care are age 18 to 64.

* The cost of nursing home care averages over $62,000 per year.

* Assisted living expenses for only three days a week averages over $16,000 per year.

Is this how YOU want to spend your retirement savings? Obtaining coverage now assures you better rates and provides peace of mind knowing that you and your family will have the means to cover the costs of care when the need arises. Don’t delay … act now while your loved ones - and you - are insurable and rates are lower.

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One couple found out it pays to consult a financial planner –

By Anne Thompson, Chief environmental correspondent of NBC News

Updated: 10:47 a.m. CT Feb 22, 2007

GAITHERSBURG, Md. - Sixty-five-year-old Julia Cardillo cares for her garden and birds during retirement near Tampa, Fla., with her husband, Paul, after raising two sons.

But 900 miles away, in Gaithersburg, Md., youngest child Matthew worried who would take care of them.

“That whole role reversal thing is difficult,” he says, “because just bringing it up is difficult.”

With nursing home costs averaging $70,000 a year, Matthew’s answer is long-term care insurance — a subject Julia wasn’t eager to talk about until they went to a financial planner.

“That was the apprehension,” she says. “Can I afford this? Can Paul and I afford this?”

Matthew felt she couldn’t afford not to buy it.

“From everything I’ve read, if you wait until you need it tomorrow, it’s generally either unaffordable or unattainable,” he says.

Since Medicare only covers 90 days of nursing home care after you’ve been in the hospital, financial planner Thomas Curtis says most people need some kind of help.

“I like to call long-term care ‘wealth insurance,’” he says.

Curtis says it allows people like Julia to protect their home and other valuable assets.

But this coverage doesn’t come cheap. Yearly premiums can run you from around $1,000 to several thousand dollars depending on your age and the options you chose.

“There are four factors I ask people to address,” says Dr. Marion Somers, a geriatric care manager and author of with ‘Eldercare Made Easier.’ “One is the benefit factor; one is the waiting period factor, the amount factor and inflation.”

And the earlier you buy it, the cheaper it is.

“I recently presented a proposal to a client where the premium was $1,250 a year,” says Curtis. “If you look at that over a 40-year time period, you’ve only paid $50,000.”

And that is far less than what an average yearly stay at a nursing home costs.

But as Julia Cardillo learned, you must budget for it, because if you stop paying the premiums, you lose your coverage.

“This gives options to everybody, including myself,” she says.

And it gives long-distance families peace of mind.

There’s new fuel for countering the objection, “I’m too young for long-term care insurance.” A recent report from the American Association for Long-Term Care Insurance (AALTCI) determined that there is an economic incentive for applying for long-term care at an earlier age.

By examining the percentage of long-term care insurance applicants who qualify for preferred health discounts, the AALTCI determined that individuals who qualify for these discounts reduce their long-term care insurance costs by 10 to 20 percent each year. The savings can amount to hundreds of dollars a year for a couple.

The study, which looked at data from eight long-term care insurers representing a large portion of new individual policies sold in the United States, determined that people who qualify for preferred health discounts tend to be in their 50s, when nearly half (42 to 59 percent) of the applicants qualified. The number of people who qualified dropped significantly when applicants were in their 70s.

“Consumers understand the risk of needing long-term care at some point in their life as they age, … but people often wait too long to plan. Individuals don’t realize that a simple change in their health can cause one to pay more for insurance protection or make you completely ineligible for coverage at any price.”

EXCERPT FROM Wealth & Retirement Planner March/April 2006

How much money do you think you need to cover the costs of health care during retirement? How about $200,000? According to Fidelity, that’s how much a 65-year-old couple without employer-sponsored health coverage will need if they retire today.

As health insurance premiums and health care costs increase and employer-sponsored retirement health benefits decline, the cost of care has been growing at a rate of 5.8% per year since 2002, when Fidelity first estimated retirement health care costs. The 2005 estimate was $190,000.

Knowing that these costs are going to continue to increase, each of us should be calculating and factoring life-long health care expenses into our overall financial planning.

EXCERPT FROM Wealth & Retirement Planner March/April 2006