Why should I be saving for retirement when I think that money could be better used when I am younger?
I have seen my parent's savings dwindle from over $200K to almost nothing due to nursing home charges. What is the point of saving if it will all eventually end up as payments to a nursing home? I am retired and have some money in a 401(k), but would like to spend some of it while we are young enough to enjoy it. My husband thinks we need to not touch it. What should we do?
Finding a balance to meet your life's financial goals of today with fulfilling goals in the future is a challenge faced by many. The question becomes even more emotional when one has seen a loved one die to early, or find them challenged to fullfil goals of travel and adventure due to physical or mental limitations.
The choice is, of course, yours. But expereince tells me that having money later in life allows you to better control your choices. If you spend it all before you reach your most mature ages, you could be faced with living conditions, quality of care and medical support that may not be comfortable to you.
I know it can't be fun when see how much money your parents on spending on nursing home charges. What is the alternative? Do you want to care for them full time? Or head to the cheapest nursing home money can buy?
Based on your question you may find some type of Hybrid Life Insurance with Long Term Care Coverage, or straight long term care insurance coverage beneficial. You will have premiums (they won't be cheap) but it may allow you the freedom to enjoy some of your other saving now, knowing you have some of your Long Term Care cost covered with the insurance.
You may want to consider a Long-Term Care insurance policy to mitigate some of the high costs of care later on, which can often be in the comfort of your own home (the longer you wait, the more expensive it can be). If you resort to Medicaid later, you typically will be required to spend down most of your assets to about $2,000 just to qualify. Your 401(k) can be rolled into an IRA that is appropriately balanced to provide some income while extending the principal. You can have a professional advisor oversee your account for as little as about a penny per dollar invested annually at Betterment.
It's a tough situation. Both my parents asked the same question. They both recently passed. I have an elder aunt and uncle who are both approaching age 100, and they are asking the same question. All four of them basically came to the same bottom line: they want to live for today, but at the same time not end up in a nursing home. They each considered a nursing home a place where people die faster. They are probably right.
But the fact of the matter is that each of them has needed hands-on care at the end of their life. They were not or are not able to perform all the activities of daily living on their own. They have each had to pay for home care out of their own pocket. But it has been worth it to them because, frankly, they want to die at home.
I see that as being at the core of your decision. If you don't want to go into a nursing home, then make sure you have your own money to pay for an at-home aide. Prices vary, and you can find out the going rate for the place where you live.
That question could be easy if you had a crystal ball to see waht the future holds for you. I believe that if you want until you feel "ready" to invest, you will most likely have waited too long. Also, the savings is even more important than the investment choice. I always tell clients to be "aggressive savers and conservative investors". The investing typically starts most easily in a low-cost no-load mutual fund (chosen based on your level of risk). Although every situation is unique, i believe that you shoudl start out with a savings discipline to first fund your "emergency fund" and then put money into any employer plans (at least up to any employer match) and then you can start with investing. I also think it is a good thing to have tax diversification by having money in many tax buckets. Here are an articles that I think is very helpful from my website: