By James Flanagan
Retirement gets a lot of attention lately
and rightfully so. Stories documenting the
decline of pensions and the pressure on Social
Security have become common.
The vital importance of individuals planning
and saving for retirement gets a lot of
(justified) press. Long term care, and the
implications for individuals and their loved
ones, is not always covered in as much detail.
To be clear – addressing retirement should
be a high priority. Planning for long term care
is about protecting your loved ones, and ensuring
that the costs don’t ruin all the other
plans you have made. First, make good plans
for retirement, for your estate, and for your
other priorities. Then make sure that long
term care doesn’t ruin them.
Some statistics to ponder (from the NY
Partnership for Long Term Care website,
• In the Northeastern Region of New York,
which includes the greater Capital district,
average nursing home rates are $303 per day,
or $110,544 per year.
• In order to apply for Medicaid, and have
the government pay your long term care costs
in a nursing home, an applicant may have
$14,550 in assets, with a monthly income of
$50. Their community spouse is allowed to
retain a maximum of $117,240 in assets, and
a monthly income of $2931.
• For home care, the Medicaid limits are
$14,550 in assets and $809 in monthly income.
For a married applicant, the asset limit is
$21,450 and a monthly income of $1192.
Those numbers are probably not what you
have in mind as part of a successful retirement.
So what to do?
There are a number of tools available to
address the potential threat that long term
care poses to your future, and your loved ones’
future. These include (but are not limited
to): traditional long Term care insurance, NY
Partnership LTC insurance, and hybrid combinations
of LTC and cash value Life Insurance.
In addition, some annuity products have
riders or other partial protection built in for long term care costs. They all have different
features, benefits, and limitations.
It’s beyond the scope of this article to define
all of these approaches, or get into the costs
and benefits of each. They are all tools, means
to an end. Like any tool, you want to use the
correct one for the job at hand. You can use a
wrench to drive a nail, but a hammer is a lot
easier, and more effective.
First, review your goals and priorities with
the people who are most important in your life.
Assess what you want to happen, and define
your wishes for your future. At that point, it
may make sense to consult with professionals
for advice. Having that background, you can
start to learn what tools may help make your
vision a reality – and which ones may not be
One note of caution – don’t wait for the
“right time” to start. Many insurers have a
maximum issue age for long term care coverage,
and all of them exclude many conditions
(such as dementia and neurological disorders).
If you wait until you are close to needing
care, you may find it difficult or impossible
to get coverage. Generally, the younger and
healthier you are, the easier (and cheaper)
it is to get coverage.
Long term care is an important consideration
– but it does not take the place of good
financial planning, or good estate planning.
It is difficult to determine a good approach
without a sense of the “big picture.”
The best approach may include multiple
professional opinions, including an estate
planning attorney and a tax advisor.
Flanagan is a wealth advisor with Sterling
Manor Financial LLC in Saratoga Springs.
Photo Courtesy Sterling Manor Financial