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Baby Boomers Retiring: Clever Tips to Avoid Facing Expensive Long-Term Care Costs

Baby boomers retiring would face expensive long-term care costs that can wipe out their retirement savings if they don’t plan for these properly.

But are they even doing enough to prepare for long-term care?

Well, I’m afraid not.

According to the recent retirement survey done by Go Banking Rates, 42% of Americans will only have $10,000 or less saved for retirement. In other words, these baby boomers will retire broke.

 

source: Go Banking Rates

 

Clearly, the numbers don’t add up. The average cost of a semi-private room in a nursing home is $85,775 while a private room in a nursing home has an average cost of $97,455. These are just the average estimate cost of care, which means rates can go higher depending on the state where you live in. Although there are affordable nursing homes, assisted living facility and other ltc options available in certain states – Louisiana, Oklahoma, Texas, Arkansas, Alabama, Missouri, Mississippi, Georgia, South Carolina and Tennessee, a $10,000 retirement savings is still not enough.

If you have done little planning, which is next to nothing, now is the perfect time to plan for expensive long-term care costs. Stop denying the fact that you will most likely need long-term care. Also, quit believing that Medicare can help you go through retirement. This myth has been debunked over and over again but there are still some who believe Medicare pays for long-term care. The truth is, Medicare doesn’t pay for long-term care.

To help you avoid the devastating cost of long-term care, here are some payment options that can help retiring baby boomers pay for their future care expenses.

 

Payment Options for Baby Boomers Retiring

 

1. Long-Term Care Insurance

Long-term care insurance is defined as a policy designed to pay for the cost of nursing homes, assisted living facilities, CCRCs, adult day care, home care and more, which continues to rise each year. It also provides comprehensive ltc benefits that can protect your assets and your family’s future as well.

However, many Americans choose to look past this type of policy. Out of the estimated 46,790,727 Americans 65 and up who are at risk of needing long-term care, only 7.2 million Americans have purchased long-term care insurance.

It’s more economical to buy a policy rather than take the risk of entering retirement without coverage. Premiums are lower when you buy early – between the age of 50 and 60 because you’re younger and healthier compared to when you’re older and at risk of developing chronic illnesses.

Below, you can find a table that can give you an idea of the estimate cost of long-term care insurance.

 


Read: Should I Get Long Term Care Insurance? [Infographic]


2. Hybrid Life Insurance

Hybrid life insurance is popular among baby boomers that will retire soon because of its attractive benefits. This type of policy is tailored-fit for retiring baby boomers that are looking for life insurance and long-term care coverage.

But just because it provides more benefits also means that a hybrid policy is right for your future needs. It might seem favorable than buying separate life insurance and long-term care insurance. However, premiums still depend on the baby boomer’s age, health condition and other underwriting factors and the amount of coverage. In fact, premiums can go as high as 40% or 50% than that of a traditional long-term care insurance.

With regard to benefits, a hybrid policy may not provide as much coverage as what a traditional long-term care policy can. This means baby boomers retiring are at risk of paying an out-of-the-pocket cost, which can be costly and defeats the purpose of having coverage for long-term care.

Weigh the pros and cons first to find out if it makes sense to get a hybrid policy or to get a traditional long-term care insurance instead, which can provide you and your family more ltc benefits and more security.

 

3. Medicaid

Medicaid helps pay for medical expenses such as wellness visits and hospitalization, home care and custodial care in a nursing home – assistance in performing activities of daily living (ADL) like eating, bathing, dressing, transferring, walking and toileting.

However, you can only receive Medicaid benefits if you can’t perform at least two of the six ADLs and if you qualify for Medicaid eligibility requirements like being a person with a disability or an older adult and someone who has income or assets below a certain level set by the state where you live in.

 

4. Aid and Attendance Benefits

Veterans Aid and Attendance Benefits pay for long-term care expenses of veterans with low-income or surviving spouses who need assistance in carrying out activities of daily living.

Since this is a pension benefit, only veterans who served at least 90 days and at least 1 day during the war, and should be honorably discharged.

To qualify, a veteran or surviving spouse must have less than $80,000 in assets excluding home and vehicle. On top of this, the income of the veteran should be lower than that Maximum Annual Pension Rate (MAPR). Here are the MAPRs for 2017.

For more information and to further understand Veterans Aid and Attendance Benefits, contact the nearest VA Office now.

 

5. Self-funding

Self-funding or self-insuring is a possible option for high-net-worth clients. This can be done but baby boomers should consult advisors to that can help figure out the cost of long-term care in the worst-case scenario like receiving long-term care for eight to ten years. How much will that cost and will your retirement funds be enough to pay for the ltc expenses?

But even if you can afford long-term care, why pay 100% when you can get it at a lower price? Buying long-term care insurance early when you’re in your 50s is cheaper compared to paying out-of-the-pocket.

So, is it a smart move to get a long-term care insurance policy even if you can afford long-term care?

Absolutely!

Buy long-term care insurance early to take advantage of lower premiums and for you to address your long term care risks early. Requesting for ALTCP long-term care insurance quotes from top insurance providers can help you find an affordable policy that can meet all your care needs in the future.


Read: Should I Buy Long Term Care Insurance Even If I Can Afford Care?


 

What’s the Best Long Term Care Payment Option for You?

All these long term care payment options can serve you well but it really depends on your needs. It’s best to determine your potential long-term care needs first, your source of income and other factors that can help you come up with the most educated decision.

This is not just about you and your needs, but also your loved ones. So, choose the option that will work best for your long-term care needs and can provide security to your family.