Everyone needs a plan for how they are going to handle long-term care (acquaintance, housing)
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There are lots of stats out there, most of which are released by LTC advocacy type groups.
I find interesting:
- How many die within a year
- How many are discharged within a year
- How many are discharged within their elimination period
- How many are instead cared for with assistance from family
- How many never receive a dime despite nursing home stay
- How many policies lapse
- Any cap in length of coverage, which is what you're betting against with your premiums
I'm too lazy to find all that right now but it is worth looking into. A lot of the costs are due to higher labor costs in the United States as well, it is possible to find quality long term care in lower cost countries much more affordable, especially for dementia related care which is a large percentage of LTC.
Don't you want to be close to friends and or family? It is possible if you have the resources to lock down your long term future not only health but a lot of other aspects of aging life. Not all or really many can do it. However that are those who can and are actively planning to do so. In our pursuit of we have noticed and heard a disturbing trend and aspect to all of this as it relates to the role of CCRC's in planning for your retirement future. Even if you never move into one or have any intention to they can have a very negative impact on your retirement future:
They many five star Nursing and Assisted Living care are located in CCRC's and not accessible to the general public.
Most importantly CCRC's are picking off the folks most financially able to pay for Nursing and Assisted Living care by either self funding or insurance. That will leave fewer people to help cover the cost of facilities that do have Medicaid beds and drive them into either going out of business or operating at a loss. I posted the article about the loss of Medicaid beds in San Francisco and how they have loss about 1/3 of the their Medicare beds. One place featured in the article closed because of losing money. Somebody has to help pay the shortage of Medicaid reimbursement and if they aren't in the system but completely in a private system for affluent folks what will happen to the overall industries ability to provide for those unable to pay themselves.
You can spend all the rest of your days worrying or you can consider the options and pick what seems most reasonable. If someone is relatively young (say, under 50 for example) they can start socking away monies they earmark for long term care, which they hopefully wouldn't need for at least 3 decades.
There are no guarantees in life and even LTC isn't really a guarantee because the future is unknown. Just do the best you can given where you are in life/circumstances/age/health/and other considerations. Don't worry about what everyone else is going to do or not do.
If someone is relatively young (say, under 50 for example) they can start socking away monies they earmark for long term care, which they hopefully wouldn't need for at least 3 decades.
Let's look at this PLAN with some reasonable numbers. Lets say I put away $500 a month, $6,000 a year. In your 50's I would think you could get LTCi for about half that. Use whatever number you like. If I'm earning 5% then in 30 years I should have a sum of $417,000! And it is all mine! But I can't spend any of it because it is for my LTC. Bummer. :-(
Now in 30 years I need LTC. If LTC is $100.000 today and increases at its historic rate then it will cost $34,301 a month so I have ONLY enough for one year! I hope you have a huge pension and SS and investments if you need more than 1 measly year.
Plus if I have a problem in year 5 of this plan I ONLY have enough for about a third of a year!
Now I guesstimate my costs for my LTCi will be about $70,000 over 30 years. Now in 30 years my plan will pay out about $226,000 a year forever.
At my 30 year time the yearly cost should be only about $195,000! $31,000 extra a year should get me in a better place. Now if I don't need it I'm out $70,000 but I could freely SPEND $350,000 of the $417,000 that you have to keep earmarked.
If you at any time lapse in payments for LTCi (like say you're in a job and you get laid off and it takes a year to find another job and you have to cut expenses going out...), you will lose everything you put into LTCi to that point and will not get any of it back. That would majorly suck. So once you start a LTCi policy you can never not pay, not ever.
If you have no worries and know you have the funds at the ready to pay each month/year for those 30 years then great!
If you at any time lapse in payments for LTCi (like say you're in a job and you get laid off and it takes a year to find another job and you have to cut expenses going out...), you will lose everything you put into LTCi to that point and will not get any of it back. That would majorly suck. So once you start a LTCi policy you can never not pay, not ever.
If you have no worries and know you have the funds at the ready to pay each month/year for those 30 years then great!
Yes, yes and yes. That is one of the flaws of LTCi that companies are having to deal with and that is participants dropping out. Low interest rates are a problem for not just individuals but for service providors that have contracted out future services for us at assumed investment rates that are out dated.
Life Insurance, Annuities along with LTCi are all at risk down the road.
Persistently low interest rates are eating into the business of the largest U.S. life insurer, analysts say.
Shares of MetLife plunged more than 8.5 percent Thursday after reporting earnings well below expectations and a $2 billion charge related to its planned spinoff of the U.S. retail business.
"It's a tough environment for life insurers," said Brett Horn of Morningstar. "I don't know it was necessarily that great a surprise. I think a low interest [rate] environment hurts life insurers, and there's not necessarily any clear end in sight, and there's some frustration on the part of the market."
In preparation for the separation of its U.S. retail unit, MetLife reviewed its variable annuity product. The study prompted an increase in reserves, or a $2 billion charge, partly due to the increase of the percentage of policyholders who choose to withdraw funds rather than to accept MetLife's offer of a fixed income annuity.
Quote:
"At the end of the day, I think MetLife is making a really bold move in separating the retail business," Barnidge said. "I think people got a little ahead of themselves."
The last quote is another topic for thought. For anyone interested
If you at any time lapse in payments for LTCi (like say you're in a job and you get laid off and it takes a year to find another job and you have to cut expenses going out...), you will lose everything you put into LTCi to that point and will not get any of it back. That would majorly suck. So once you start a LTCi policy you can never not pay, not ever.
If you have no worries and know you have the funds at the ready to pay each month/year for those 30 years then great!
Well if you are out of a job then you won't be stuffing anything aside either. Altho my example pretty much showed how futile that plan was.
But people do get LTCi just for short periods of time ad let them lapse when they feel comfortable in covering their costs on their own. I suggest anyone getting LTCi early so they do get better rates and they qualify for it. Plus early is where a LTC event would have the most drastic affect on your life plan. if you pay for 10 years then you got 10 years of coverage vs not having any coverage.
If a year of no work keeps you from making premiums think how going into a nursing home will affect your life.
Now my plan will give me back all my premiums up until about age 77! Maybe you can find a plan that does the same.
If you at any time lapse in payments for LTCi (like say you're in a job and you get laid off and it takes a year to find another job and you have to cut expenses going out...), you will lose everything you put into LTCi to that point and will not get any of it back. That would majorly suck. So once you start a LTCi policy you can never not pay, not ever.
If you have no worries and know you have the funds at the ready to pay each month/year for those 30 years then great!
So let's problem solve this. Anyone seriously considering LTCi should have $100,000 at age 50. If you put that in the market and earmark it for LTCi then at a 4% withdrawal rate you should be able to pull $4,000 a year to pay the premiums at $4,000 per year for 30 years and still have your $100,000. Solves that problem of lapsing.
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