Many of our clients anticipate the likelihood that some level of long-term care may be needed at a future date. As we work together toward constructing comprehensive financial plans, addressing and preparing for uncertainties is a critical consideration. Costs for various levels of care such as in-home, assisted living and skilled nursing may be significant. A common approach to addressing the impacts of long-term care costs is analyzing trade-offs between self-insuring (relying on income sources such as Social Security, pensions, retirement accounts, etc.) or purchasing / maintaining a long-term care insurance policy. As financial planners, our focus is creating viable game plans to combat these uncertainties with the appropriate reflection and preparation.
According to Morningstar statistics, roughly 52% of Baby Boomers turning age 65 will experience a long-term care need, averaging a 2-year facility stay during their lifetimes. Given these staggering statistics, periodic financial assessment is imperative. Utilizing sophisticated financial planning tools, our team works with clients in determining the potential effects of future care costs. Once general information is collected, our typical approach is then to demonstrate specific events that may adversely affect an individual’s standard of living. Our team has the capability to model alternative financial decisions, ideally arriving at an agreeable solution to diminish future financial stresses. As an example, we may determine (though some assumptions) purchasing or maintaining a long-term care insurance policy may be most beneficial and demonstrate the policy benefits for when certain levels of care are needed. More specifically, further analysis may include illustrations to trade-offs between payments for long-term care insurance premiums versus alternative uses for these dollars. Through our periodic meeting reviews, the foundations to a comprehensive financial plan is paved.
Prior to requiring long-term care, many of our clients contemplate their decisions to independent living at a retirement facility. Considerations may include favoring increased levels of socialization, activities, preparation of meals or assistance with housekeeping. In these situations, regardless to ownership of a long-term care insurance policy, an individual would not yet qualify for benefits. Long-term care insurance benefits may begin when two activities of daily living cannot be performed without substantial assistance (such as dressing, eating, bathing, etc.) or a severe cognitive impartment (such as Alzheimer’s) is established by a registered physician. Furthermore, any waiting periods must be satisfied and facilities must be eligible to quality for insurance benefits.
In the Central Valley, many facilities offer solutions to an array of care and service needs, inclusive of independent and dependent assistance. A key consideration is determining the right facility fit. Deliberations may range from financial feasibility, cost structures (i.e. ammonization schedules which are timeframes an individual or (a) beneficiary/ies are eligible to receive portions of entrance fee monies at specified periods of time within certain circumstances) and personal attraction towards amenities. Our team is equipt with substantial experience gathering and presenting this information with technologies and understandings to our client’s financial circumstances. As desirable facilities are identified, our services include partnering with facility personnel to further determine material information. Our goals are to not only partner with our clients, but when warranted, involve other professionals in our development and decision making process.
As financial planners, our fiduciary responsibility is to best position our clients for not only an enjoyable investment experience but also establish strategies for life’s financial uncertainties. Appropriate planning is important in determining income and portfolio sustainability for long-term care costs. As planning can often be complex, incorporating insurance professionals and facility personnel in our development process is often a practical approach. Nonetheless, periodic discussions is often key to successful financial outcomes.
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