Planning Ahead for Long-Term Care and Costs in Retirement

If you or a loved one are planning ahead for retirement, you may be thinking about potential healthcare costs. You may not, however, be thinking about the potential costs of long-term care. Since most seniors will need long-term care, it’s smart to put together a plan to cover the costs. Here are some ways you can factor long-term care into your financial planning. You might seek some counseling from individuals who specialize in proving long-term care planning.

Retired couple sit by mountain lake enjoying the scenery.

Be Aware of What Medicare Covers

When you depend on Medicare, it can be disappointing to discover that not all healthcare expenses will be covered. Long-term care is very rarely paid for by Medicare benefits since much of the care provided in nursing homes and assisted living care centers is viewed as custodial care. This care, such as bathing, eating, and assistance with other daily tasks, is essential to patients. However, supplemental plans can help seniors offset some of the other costs of their care. Certain Medicare Advantage plans can provide relief in dealing with expenses associated with prescriptions, and dental and vision care. As a result, this could free up more funds to put toward long-term care costs.

Determine the Risk for Long-Term Care

If you can get an idea of what kind of care may be needed, you can better prepare to pay for it. Most older Americans will need long-term care at some point, but certain factors determine for how long and what level of care is needed. Those risk factors of needing long-term care: include age, family history, and your living arrangements. In many cases, you can take steps to decrease the need for care, like exercising more or eating healthier. By assessing the need for long-term care, you can decide how much of your savings you may need to set aside and what plans you need to make.

Get Quality Life Insurance

Life insurance gives you and your loved ones peace of mind and can even provide benefits beyond the intended purposes. Depending on your policy, you may be able to sell your life insurance policy for a cash payout. This can be a viable option for taking care of unexpected expenses, long-term care costs, or to free up more money for retirement. Contrary to popular belief, not everyone needs a life insurance policy. If your children are grown, and your estate is small or liquid enough that you aren’t worried about covering your estate taxes, it’s okay to cash in your policy early. Whether you use it now or your family uses it later, life insurance can provide more financial options for you and your loved ones. When surveying life insurance, it’s also a good idea to consider final expense insurance, which is a type of whole life insurance. Burial insurance can provide funds for your family to pay for funeral costs and any medical bills or debt you leave behind. This can relieve a huge burden for your family as the average cost of a funeral is $9,000.

Know How to Use Your Home

You may also be able to use your home to pay for care. The most obvious solution is to sell your home if you will be living with a loved one or in a care facility. However, sometimes selling your home is not the best option. If you need to live in your home while or after you receive care, there are a couple of different ways to get the cash you need. You can use a reverse mortgage or home equity loan to free up funds, but both options have their pros and cons. Some seniors have found it worthwhile to rent out all or part of their home and use the rent toward healthcare costs. Just be aware of what this may mean for any Medicaid benefits.

Thinking about long-term care may not be pleasant, but planning for costs can prevent a lot of unpleasant stress later. So if you or a loved one is getting ready for retirement, make sure you take some time to factor in the possibility of long-term care expenses.