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Thursday, September 12, 2024

Finance Options for Long-Term Care

According to, 70% of adults age 65 and older will need some form of long-term care such as a nursing home, an assisted living facility, or personal care services. Saving for your retirement is one thing, but saving for long-term care services can be an entirely different ball of wax.

There is a misconception that Medicare pays for long-term care, but it doesn’t – and it can be financially draining when it all has to come out of your own pocket. That’s why many are seeking private financing options such as long-term care insurance, trusts, annuities, and reverse mortgages to help cover the cost. The best option will often depend on your age and health status. If you are in good health, the best options might be long-term care insurance, deferred long-term annuity, and continuing care retirement communities. If health considerations are irrelevant, utilizing a reverse mortgage or saving for long-term care could be better options. However, if you are in poor health, understanding your current life insurance options and how they could help would be beneficial.

Long-Term Care (LTC) Insurance

An LTC policy can be very flexible, allowing you to choose which services you want to cover as well as how many. The cost will depend on your age when you buy the policy as well as the benefits you choose. Keep the premium below 7% of your retirement income and budget for premiums to rise 10% per decade. If you are in poor health, you may not qualify for LTC insurance.

Reverse Mortgages

Available to homeowners age 62 and older, a reverse mortgage is similar to a home equity loan, providing you with cash against the value of your home without selling it. You don’t have to repay the loan as long as you continue to live in the home. The amount owed becomes due when you or the last borrower dies, sells, or moves out of the home.

Life Insurance Options

Long-term care services can also be funded by life insurance policy options through accelerated death benefits, life settlements, and viatical settlements. Keep in mind that these can be very limiting and may affect your eligibility for other programs. In some cases, these options may only be available if you are terminally ill.

Personal Saving

Saving for long-term care on top of retirement saving can be easier said than done. Online calculators can help you approximate how much you need depending on a variety of circumstances. Long-term care experts estimate you need $1 – $2 million per person in total retirement savings to cover most long-term care needs. Many people accomplish saving on their own through immediate or long-term care annuities, trusts, or continuing care retirement communities.

Information taken from:www.longtermcare.govand Money Magazine

Carrie Robertson
Research & Community Education

Chicago Skilled Nursing
Chicago Senior Living

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