Be Prepared for Retirement Costs

“In this world, nothing can be said to be certain except Death and Taxes,“ Benjamin Franklin once said.

As long as you are still breathing, the government will tax you and will continue to find new ways to keep taxing you.  Enter the Washington State Long-Term Care Trust Act.  With the passage of this law, it forces every Washington state citizen to have some form of Long-Term Care Insurance starting January 1, 2022.  Comply, or you will be taxed. 

I don’t have Long-Term Care insurance myself, but working in the healthcare field that cares for residents in Senior Living communities, I have come to feel the inevitability of staying in a nursing home, or any form of retirement community at some point in my life.  After about 10 years working in this environment, I’ve experienced it firsthand: seniors moving in retirement homes whether they want to or not.  The ones who have accepted their reality, the destiny of living in these kinds of communities, typically thrive better than the ones who are in denial. 

As you get older, it’s inevitable to need some form of care whether it’s in a nursing home or your own home.  According to the data gathered by the Administration for Community Living in 2020, close to 70% of people aged 65 will need long-term care services or support.  Women typically need care for an average of 3.7 years; while men, for 2.2 years. 

So, are you prepared to pay these costs?  According to AARP, depending on where you live in the US, the cost of nursing homes ranges from $85,800 to $150,000 per year.  As per the Association for LTCi’s Sourcebook published in 2008, 30% of nursing home stays are between 1-3 years, women stay an average of 2.6 years, and men, for 2.3 years.  Now, if you were to stay at home and hire a caregiver—based on my experience working with homecare companies in Chicago and the neighboring area—the average cost of a caregiver at the time of writing is $25/hr., or around $300/day.  With a rate of $300/day, it would cost you $159,000 in two years.  Though that’s definitely a cheaper alternative to staying in a nursing home, it’s still a lot of money.  But we are living longer and longer, aren’t we?  So the likelihood of you staying in a nursing home or living with a full-time caregiver for more than 2 years is increasing. And then what?  Will you be using up your retirement savings to pay for these costs?  Discounting a major illness that will send you to hospital or an ensuing rehab stay, how much is going to be left in your retirement savings to pay for your day to day needs that could last you for your lifetime?  What if you get disable and can no longer work, robbing you of the chance to even save for retirement? 

I’d rather spend my retirement savings for a life of fun and leisure rather than use it up on healthcare and homecare costs.  I’d rather be sipping wine and looking out the countryside in Tuscany, Italy, stroll down the cobbled streets of Granada, Spain, or lounge by the beach in Mactan, close to my hometown in the Philippines.

The amount of money that we would need to spend—just to get by when we retire—is a scary thought.  And I have been preparing for that as much and as well as I can.  I have my Roth and Traditional IRA, my 401k, and my life insurance to supplement these retirement accounts, with cash value that grows at the same rate that the stock market grows, yet doesn’t lose money when the stock market crashes. 

I have a feeling that my wife will outlive me.  When I’m gone, and our kids have their own families to worry about, the prospect of my wife staying in a nursing home seems like a certainty.  That’s why we are getting her a plan that would pay for her long-term costs when the time comes, and still leave money behind to our children, plus the added fallback that if we change our minds, we can get our money back. 

As for myself, though I haven’t really decided to get my own long-term care insurance yet—as there are talks that Illinois would soon follow suit and pass a similar law that Washington state passed—the government has helped make my mind up for me.  If I were to get taxed and be forced into signing up for an LTC insurance, I’d rather get the best kind of plan that suits my needs, with all those benefits that I’ve mentioned above.  If you want to know more about this plan, give us a call at (312)469-0016. Or fill up the form below and one of our consultants will get back to you.

Published by ascend99inc

Hello! I've served clients for about 20 years now. Recently, I've focused my mission to help families ensure their financial future. Please don't hesitate to contact me so I may be able to help you and your family.

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