When planning for retirement, you probably picture yourself taking trips, spending time with family, volunteering, or relaxing on the golf course. A part of retirement that may not be at the forefront of your mind is senior care. However, preparing for Long Term Care (LTC) expenses should be an important part of your retirement planning, especially with the cost of senior care continuing to rise.
According to a survey by Genworth, the median cost of nursing home care in the United States is over $85,000, and that is just for a semi-private room. Medicare cannot be counted on to cover more than a small fraction—a maximum of up to a few months—of that cost. So what are your other options?
Paying for LTC out of pocket, of course, is prohibitive for the majority of retirees and their families. LTC insurance is an option, but providers have been decreasing as premiums increase, averaging close to $3,000 per year. An LTC insurance plan may not even be available to you, depending on your health and age when seeking insurance.
That option works for people in financial and medical need, but it requires that the applicant have no more than $2,000 in countable resources, not including the value of their primary residence. However, by planning far enough in advance, you can arrange your financial affairs to meet those asset limits.
One option is to make transfers of your assets into an irrevocable trust benefiting your loved ones, no less than five years in advance of your need for Medicare and LTC. By planning at least five years ahead, you will not be penalized for making the transfers. In fact, you might be able to keep the right to the income from the trust to help you pay for LTC, just not the asset itself.
With so many factors involved in planning for long term care during these rapidly changing times, it can be confusing to understand the best route to take. Decisions you make now will impact you and your family for years down the road. By seeking assistance from an experienced financial, estate, and elder law attorney, you can help ensure that your estate will be preserved for your family rather than wiped out with the costs of long term care.
This is just one topic covered in our Legacy Wealth building webinar. Webinars are free to attend. Register for the next upcoming webinar here.« Back to Blog