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Don't Forget Long-Term Care in Retirement Plans

Here is a scary fact—according to the Centers for Medicare & Medicaid Services' 2015 Medicare & You, at least 70% of people over 65 will need long-term care services and support at some point in their lives. Are people ready for this? I don't think so. Unfortunately, it is one of the most overlooked costs in retirement planning.

When meeting with clients and preparing financial plans, long-term care or “facing incapacity” is by far the most difficult subject to bring up. Clients seem to have little difficulty facing their own mortality and preparing to provide for survivors after they are gone. Bring up long-term care and the possibility of needing help with daily activities like bathing, dressing, toileting, eating, transferring, continence, or supervision and care due to memory loss and the client conversation gets shut down quickly. Long-term care, provided either at home or in a facility, can cost $30,000 to $100,000 a year or more. Many clients are in denial of this reality. But the future costs of long-term care can't be ignored. (For related reading, see: Long-Term Care: More Than Just a Nursing Home.)

Educate Yourself About Long-Term Care

In my practice I see this every day, and in my personal life I witnessed it first hand when my mother, father and grandmother were in their later years. In fact, the sheer number of people who are not prepared prompted me to write a book in an effort to help people to understand the risks and options, and to plan accordingly. (For related reading, see: Taking the Surprise out of Long-Term Care.)

Throughout the country there are senior centers that can provide education and access to important insurance and healthcare news, but there is no comprehensive source that can address all the different programs and planning needs that a family faces during a long-term care crisis.

Be Ready for a Long-Term Care Event

So what should you do to help make sure you or your loved ones are taken care of in those "golden" years? You need a comprehensive plan!

  • Check to make sure you have basic estate planning documents in place. Unsigned copies of wills, powers of attorney and HIPAA releases will not help you. Working with a qualified attorney to draft and record these documents will help protect you and your estate.
  • You may be eligible for special assistance programs; Veterans Aid & Attendance helped pay for my mother’s dementia care. As a Navy nurse her own service qualified her, but you also could qualify if your spouse was a veteran. (For related reading, see: Alternatives to Long-Term Care Insurance.)
  • Prior to any long-term care event, investigate long-term care insurance. Traditional insurance options and alternative plans are offered by major insurance carriers. There could be other benefits you are entitled to from your employment.
  • If you plan to pay for long-term care yourself, get a written financial plan in place. There are numerous tax deductions and decisions your loved ones will need to make to efficiently pay for care. Consider using your retirement accounts to pay for long-term care so the taxable distributions are offset by deductible medical expenses.

I cannot stress enough the difference a written financial plan can make. By taking the time now to address your wishes and put them in writing, you help ensure that your loved ones have the road map and assets they will need to provide for you during a long-term care crisis. There is no guarantee you will become frail and require care, but as life expectancy increases the risk of needing long-term care does too. (For more from this author, see: 7 Common Medicare Mistakes and How to Avoid Them.)


Hans E. Scheil, CFP®, is the CEO of North Carolina-based Cardinal Retirement Planning, Inc. and the author of “The Complete Cardinal Guide to Planning for and Living in Retirement.” You can get a copy of his book at the Wake and Durham county libraries or on Amazon.com.