Here's the number one myth in retirement planning.  It's the fallacy that long term care – the sustained care many of us will need during retirement – is covered by Medicare or private health insurance.

Contrary to what most people believe, long term care – the type of care required by those suffering from cognitive impairment or the inability to perform the basic activities of daily living (such as bathing, dressing, toileting, eating, transferring and continence) - is not covered by these programs. Long term care insurance is vital in addressing this critical gap.  "As Baby Boomer and Gen Xers come of age, most have not seriously considered how they will pay for or even deal with a future need for care at home or in a facility.  Since private health insurance or Medicare will not cover extended care, this issue is growing with pandemic implications," Don Levin, Chairman of the Board of the National LTC Network, said, adding, "While they might not know how to pay for it, one thing is sure: The clear majority do not want to place the burden of care on their children."  Long term care insurance (LTCI) was certainly a novelty when created in the mid-1970s.  The unique benefits paid by LTCI made pricing difficult at best, and the older blocks of early policies were vastly underpriced.  Low prices, long benefits and wrong assumptions by carriers offering the early LTCI products have demanded significant premium increases to survive.

Current pricing on new policies reflects lessons learned from those early years.  Levin explains, "The plans today offer policyholders a wide range of coverage options and features, some of which were not available in early policies. Over 70% of those receiving care now do so in the privacy and comfort of their homes. Benefit flexibility is an important part of what today's policies offer."

Anyone doing retirement planning today should know that long term care insurance is an important part of retirement planning.