It’s a fact of life that the subjects we often wish to avoid the most are the very ones we should be discussing. One of these is long-term care. Our population is continuing to both grow and live longer, creating an increased demand for caretakers, nursing homes, and medical care for the elderly. Unsurprisingly, this raises questions about how to pay for quality care for those that need it the most. Currently, 70% of people turning 65 can expect to use some form of long-term care during their lifetime. When planning for your future, here are some things you should consider:
The Rise of Long-Term Care Rates
It’s no surprise that, like many things, the cost of long-term care has increased. Just how much? Rates have actually quadrupled in the last 30 years, from $50 a day to over $200 a day. Nursing home care cost has risen approximately 4.5% per year, and it’s not likely to improve. When calculating the costs of long-term care insurance, the emphasis is on “long-term”—you’ll need to make sure you can afford the premium. The average age at which someone begins needing long-term care is 81, which is why planning ahead becomes so important.
When Should I Start Thinking About Long Term Care?
If you’re in your 20’s or 30’s, this is not so much of an issue. During these decades, your focus is typically on building your financial stability; establishing an emergency fund, paying down debts, and contributing to a retirement fund. But by the time you reach your late 40’s to 50’s, your life post-retirement will probably start becoming more of a priority. This is when the long-term care discussion should start coming into play.
The Advantages of Planning Ahead
Even though long-term care may not be a top concern in your 20’s and 30’s, your 40’s and 50’s may still seem a bit early for something you’re not planning on for another 20-30 years. Still, there are many reasons to consider your options sooner rather than later. One of the main benefits of starting the discussion early is that not only are you still living independently, but you’re also probably at a time in your life where you are able to allocate more of your funds towards your post-retirement life. These discussions should happen when time is on your side, and you’re able to convey your wishes to your family. Some other things to consider when considering your long-term care options are:
- Nursing homes, assisted living or senior living: how long will you stay in your home? If you’re unable to do so, what are your preferences? Have you considered nursing homes and assisted living and checked to see how long you might be in one?
- Health: talk to your family or friends about your wishes, and what would happen if you become seriously ill or disabled
- Legal decisions: discuss advance directives that state your wishes for medical care
- Financial: what are your resources? How will you allocate them?
Making these decisions long before they’re implemented can benefit you in many ways, including:
- The time is now. Long-term care insurance operates on its most basic level like any other insurance. In strictly practical terms, you must purchase long-term care insurance before you actually need it. By planning now, you can decrease your chances of becoming uninsurable at a later date, which can place a burden on the resources of you and your family.
- Age is a factor. The younger you are, the more likely you are to be in better health, which can lower your premium. It will be much easier to arrange your finances now, as premiums only become more expensive the longer you wait.
- You’re better together. If both you and your spouse are purchasing a long-term care policy, you can have the option of sharing it for additional coverage.
- Made to order. You are also able to tailor your daily benefit; if your resources are such that you will be able to supplement your daily benefit with other retirement income, you may be able to reduce the amount you pay on your premium.
Supplementing Your Benefit with Life Insurance
When considering the costs of long-term care, you may also consider your life insurance policy or a rider on your life insurance policy as a way to supplement your income later in life. While life insurance and their riders are not a substitute for long-term care or disability income insurance, they also have the potential to help protect you financially in your later years. For example, with Farm Bureau’s Daily Living Rider, you can choose to receive a portion of your policy’s death benefit to help cover expenses if you become chronically ill or unable to care for yourself. If you find yourself unable to perform two of five essential tasks of daily living—eating, toileting, transferring, bathing, dressing, and/or continence—you can choose to activate the benefits of this rider. The resulting benefit can help supplement your increased living costs, and can provide additional peace of mind when dealing with financial or care issues. If you’d like to learn more about the advantages of the Daily Living Benefit Rider, ask your Farm Bureau agent.
Discussing your long-term care needs isn’t an easy conversation, but it’s one that you need to have. By planning ahead, you’re able to provide both you and your family the peace of mind that comes with knowing that your wishes and priorities can be taken care of. Once you’ve tackled the issue of the future, you can get back to the business of the present, and taking care of the things that matter most.