WSJ Advice Demonstrates Lack of Insight
In the December 4, 2012 issue of the WSJ entitled “Time for Elder Care?”, Kristen Gerencher offered advice for children of elders needing long-term care (LTC), but included only one questionable strategy about how to prevent LTC from bankrupting Mom and Dad (and possibly reduce the kids’ inheritance to $0.00!).
Obviously timed for those family get-togethers during the holidays, the story advises adult sons & daughters to take a good look to see if Mom & Dad are slipping, either mentally or physically, and may need some LTC assistance. If so, Gerencher lists professionals who can help find the right level of assistance.
Grencher suggests that the adult children look into options, ranging from voluntary services such as nutritional programs to more expensive (but unmentioned) alternatives such as moving to an assisted living facility or nursing home.
The reporter notes – correctly – that “Medicare doesn’t cover most LTC costs” and adds that “Medicaid covers them under certain conditions.” But she fails to add that the “conditions” are typically after Mom and Dad have spent their worldly assets (the kids’ inheritance) paying for long-term care and are impoverished. She does add, however, that the kids can consult an elder law attorney to make sure that their parents’ assets are properly sheltered, but then helpfully notes that any clever actions like cash gifts or transfers of assets to junior MUST be made at least five years before the parents apply for Medicaid. Ah, hah, the first reference to planning to avoid financial ruin!!
Sadly for her readers, Gerencher does not even mention long-term care insurance LTCi), which requires frank discussion and careful planning between parents and adult children! With reasonably priced LTCi, Mom & Dad will have the funds to retain their dignity and options to defray the cost of a wide range of LTC, based on their needs. Furthermore, the whole family will be able to gather during the holidays and at other times with peace of mind and a definite plan of action if the kids notice a need for care, which research has shown will happen to about 70% of elders.
Sounds like a plan to me!
Americans Continue to Save Little for Retirement
Matthew Drinkwater of the Life Insurance and Market Research Association(LIMRA) recently reported that “two-thirds of middle-income ($40,000-$99,999) American workers are saving less than five percent of their annual income for retirement – with nearly a quarter saving nothing at all.” (Life & Health Advisor, Nov 2, 2012. East Walpole MA 02032: JonHope Publishing Company, Inc.)
He continued, “While current economic conditions are clearly challenging Americans’ ability to save for retirement, savings habits have not changed significantly over the past two decades. Over this period, employer-sponsored retirement plans have continued to transition from defined benefit plans managed by employers to defined contribution plans where workers are fully responsible for their retirement funds.”
These sobering research results clearly underline the necessity of planning for the cost of long-term care (LTC), which two-thirds of Americans over 65 will require in their retirement years. Since average annual costs for care exceed $60,000.00, elders without reasonably priced LTC insurance will face the unpleasant choice of burdening family members with their care or spending what little retirement funds and other savings they have accumulated and then hoping that Medicaid has enough funds to pay for their care in a nursing home.
The best hedge against this sad future is to learn about LTC insurance and take appropriate action TODAY!
Happy Long-Term Care Awareness Month!
November is Long-Term Care Awareness Month. The U.S. Congress has urged “the people of the United States to recognize (this) as an opportunity to learn more about the potential risks and costs … and the options available.” We’re proud to support this important educational campaign.
Long-Term Care Awareness Month was created by the American Association for Long-Term Care Insurance (AALTCi). It’s purpose is to encourage the public to plan for the possibility of needing long-term care well in advance of when it might be needed.
You protect against other risks like a car accident or house fire. A need for long-term care is a risk to your savings and to your retirement. It will impact your family and loved ones. Just as it is smart to plan ahead for retirement, it’s smart to plan now for long-term care.
Don’t Count On Working Longer As A Remedy For Inadequate Savings
Workers may think delaying retirement is a solution to inadequate savings, but this may not a reliable strategy, finds Kiplinger’s Personal Finance reporter Eleanor Laise in her September 12, 2012 column.
More than one out of four workers now plan to retire at age 70 or later, according to the Employee Benefit Research Institute. That’s up from 16% in the pre-crisis days of 2007. Just 8% of workers expect to retire before age 60, down from 17% in 2007.
But there’s a jarring disconnect between workers’ expectations and retirement reality. Fully half of the retirees surveyed by the EBRI this year said they left the workforce earlier than planned, and just 8% of them said that positive factors — such as the ability to afford early retirement — prompted the move. For the vast majority of early retirees, negative circumstances, such as company downsizing, played a role.
Please take heed. In today’s harsh economic times, there is a greater need for long-term care insurance ownership than ever before.
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