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Not Planning for Long-Term Care is Ridiculous
Matt McCann -- Long Term Care Expert Matt McCann -- Long Term Care Expert
Atlanta , GA
Saturday, July 13, 2019

Matt McCann - Long-Term Care Specialist

Generally, if you are age 40 or older, you have established some type of retirement plan. Hopefully, you are saving money in your employer's 401(k) program, an IRA, or another saving vehicle so you can enjoy a future successful retirement. Perhaps you have thought of everything that could get in your way but have you accounted for the expensive costs and related burdens created by long-term care services and supports? Too many people believe those hard-earned savings will easily pay for extended care as they get older. This is the message from a leading advocate for long-term care planning.

"There are several issues when it comes to the financial costs and burdens of aging that some people don't consider or just fail to think about until it is too late. Not thinking about the impact of longevity and how the costs of long-term care will impact family and finances is just ridiculous," said Matt McCann, a well-known specialist in long-term care planning.

McCann, addressing financial planners and insurance specialists in Atlanta, said the cost of long-term care services and supports are very expensive and it Is not getting any cheaper. Demographics, an ever improving economy, and rising wages mean these long-term care costs will increase substantially in the next 20, 30, 40+ years that you should consider.

"As Generation X, combined with the Late-Boomers, along with the existing Boomers who continue to live to older and older ages, will equate to large numbers of people requiring care and fewer people in the workforce providing these services. This will force wages for these services up and the impact on the American family will substantially reduce the amount of assets moving from one generation to another," McCann said.

Longevity is a major concern according to McCann. The advances in medical science allow us to recover and survive from health events and accidents like never before. This longevity comes at a price. Living to older ages means you are subject to higher risks of cognitive decline and other "aging" issues in addition to the many other illnesses or accidents which cause us to require help with normal activities of daily living or supervision due to some form of dementia, including Alzheimer's.

Looking at the current national median average of the cost of this type of care you can see how quickly it will impact retirement accounts, income, and lifestyle.

McCann explained how skilled nursing home care is the most expensive type of long-term care service although the least used option. One year of care today will cost around $100,375. If you are, for example, a 50-year-old, you will see the cost jump to about $243,636 a year thirty years from now.

Generally, a person will need several years or more of long-term care services and supports before they ever get to a nursing home. An average 44 hour-a-week of home care in 30 years should run $122,179 a year. There could be adult day care center charges on top of that which helps you stay in your own home longer. Perhaps you go to assisted living. That isn't cheap either, McCann says, with the base cost in 30 years expected to be $116,509 a year. You add additional services, depending on the amount of needs you require, add another $500 to $1500 a month to that cost.

If you're a couple these costs will increase as one of you will need care generally first (usually the male). McCann says this will drain savings and adversely impact the income and lifestyle of the other spouse. It also leaves less money available for normal retirement costs much less their future long-term care.

Now consider if you happen to need care longer than average due to Alzheimer's or a massive stroke. Perhaps you are healthy but just old and frail and require some help at home for years and years.

"Unless you plan on not spending any money at all in retirement so it can all be used for extended care this is not a plan that looks too promising. Even if you have millions in assets you could lose a substantial amount of money not considering the tax implications of selling off assets to pay for this care," McCann said.

McCann says a plan that includes "self-insuring" for long-term care really means you are placing the full responsibility of either caregiving or managing paid care services on the shoulders of your adult children and their families … or both.

Family members are not the answer. Caregiving is not easy. Adult children will have their own careers, families, and responsibilities. They will not be able to be both a caregiver while dealing with other aspects of life.

"If they don't already have careers and families of their own, they certainly will in the decades ahead. Caregiving is very difficult for family members. There is a physical, emotional, and financial burden that your family faces when you get older and need help. Do you really want to place this responsibility on your children? Most people I speak with say no," McCann said.

Family caregivers will generally have to take time off work. Which one of your children do you think could do that? The balance of work and family is not easy. Not everyone will have a job that will allow for this. Plus, they financially would not be usually in a position to lose the income from their employment to be your caregiver.

"Even if they didn't need to work there is still an impact as the time taken to be a caregiver means time taken away from their family," according to McCann.

The physical and mental demands are numerous and many caregivers face their own health and mental issues concerns as a result of being a caregiver.

If they are just managing paid caregivers it might be a little easier. It is a difficult task to keep up on and creates its own challenges.  They probably are not trained for either job either.

"You need to ask yourself; will your children make the same decisions about your care as you would want them to? What accounts would they liquate first? Will they try to save money on less expensive options which perhaps are lower quality? Not to mention what happens when the money runs out. This is why planning in advance is essential to a future successful retirement, "added McCann.

Uncertainty of your savings is the next part of the equation of considering "self-insuring". You will never be able to time the market. Your need for care may occur when the market has dropped in a correction. This means you will be selling at a loss but that loss is still probably a taxable gain and the tax person will still have their handout making the cost of your future long-term care even more expensive.

The fact is Long-Term Care Insurance is very affordable for most people. You could never use what the premium for your policy would cost you and just invest it and come anywhere close to the amount of tax-free benefits and services you would have with a Long-Term Care Insurance policy.

Again, no matter what you read, the premiums are very affordable for most people, especially when you plan prior to retirement when you enjoy better health and lower premiums.

Today's policies are also rate stable. Most states have rate stability rules in place and all plans are priced not only on these new rules but considering the extreme low-interest rate environment when have been experiencing for some time.

It is key to work with a qualified and experience long-term care specialist that works with the major companies in the industry. First, premiums can vary 250% in some cases for the same coverage. Underwriting criteria also vary from company to company. Most financial planners and general insurance agents have no understanding of the power of the federal/state Long-Term Care Partnership Program which provides additional dollar-for-dollar asset protection if you have a qualified plan in place. This means if you exhaust all your benefits you would qualify for the Medicaid Long-Term Care benefit without being poor. The state will "disregard" an amount of your estate based on the total amount of benefits paid by your policy. This is extra peace-of-mind.

Plus, a specialist will understand policy design so they will make the right recommendation so you don't over-insure.

There are several types of long-term care policies available. Some have unlimited benefits you can never exhaust. Some you can pay all the premiums with one or several payments. Some have death benefits or return of premium options. Many have joint spousal benefits. Tax benefits are available. You can even use your Health Savings Account pre-tax money to pay premiums.

It still comes down to family. An affordable Long-Term Care policy makes getting older easier on those you love. Professional case management, which most policies offer, help develop an appropriate plan of care, find the right caregivers and facilities, and even monitor your progress allowing your family the time to be family.

"Wouldn't you rather give your family the time to be family and not place them into crisis management? Wouldn't you rather give yourself access to your choice of quality care in the setting you desire? Wouldn't you rather leave some legacy to your family instead of memories or hardship and despair? These are the questions we all need to ask. For most of us the easy and affordable solution is Long-Term Care Insurance," McCann said.

However, you might never need long-term care. You should know the statistics … it's "when and how long" more than "if". Either way, the peace-of-mind knowing you have a plan in place will make you and your family feel better.

"Start your plan for a future successful retirement by adding an affordable Long-Term Care Insurance policy to your overall plan. It is easy, affordable, and rate stable income and asset protection," McCann added.

He says to work with a qualified Long-Term Care Insurance specialist, like himself, who will help shop and design an affordable plan based on an individual's needs. McCann suggests starting your online research before seeking quotes. Consumers can learn more at: https://mccannltc.net/resources/faq. On the site there is a link to obtain free quotes from all the major companies.

Another key research item is to understand the current and future costs of long-term care services in your state or the state you plan to retire to in the future. Plus, you need to know if the state participates in the federal/state long-term care partnership program. You can find this information, including available tax incentives, here: https://www.ltcnews.com/resources/state-information.

Matt McCann
McCann Insurance Services, Inc
Darien, IL