by timelessnc | Nov 20, 2018 | life insurance, Managing Healthcare Expenses
No one plans to spend retirement in a nursing home or an assisted living community. However, that could be a reality for many retirees. According to the U.S. Department of Health and Human Services, someone turning 65 today has a 70 percent chance of needing long-term care in the future. Twenty percent of those individuals will need care for more than five years.1
Long-term care isn’t always provided in a nursing home or other facility. Many seniors need in-home assistance with tasks such as bathing, eating and mobility. Whether the care is provided in the home or in a facility, though, it’s likely to cost thousands of dollars a month. If the care is needed for several months or years, it’s easy to see how the cost could deplete one’s savings.
Fortunately, you can minimize the impact by planning ahead. Below are four common strategies many seniors use to fund their long-term care needs. A financial professional can help you determine which strategy is right for you.
Pay out of pocket.
There’s always the option to pay out of your savings and investments for your long-term care. That may be sufficient if you require minimal help, like hiring someone to run errands or do basic chores.
If you need more intensive assistance, however, you may find it difficult to pay for care out of pocket. A recent Genworth study found that the average assisted living facility costs $3,750 per month. An in-home health aide costs more than $4,000 per month on average.2
Consider what it would mean to pay those bills over several years. While you may cover some costs out of pocket, you may not want to rely on this method as your only funding option.
Use Medicaid.
Many retirees assume that Medicare will cover all their health care costs. That’s not usually the case. There are many services that aren’t covered by Medicare, and long-term care is one of them. Medicaid, on the other hand, will cover stays in nursing homes or other facilities.
There’s a catch to using Medicaid, though. You have to have few assets and little income to qualify for Medicaid protection. That means many seniors are forced to deplete their own assets before they transition to Medicaid funding. If you need to leave assets for your spouse or want to leave a legacy for your family, you may not want to spend down your assets to get Medicaid protection.
Get a reverse mortgage.
If your home is paid off, you may want to tap into the equity to pay for your long-term care needs. Your reverse mortgage lender gives you money for the home’s equity, usually in the form of monthly payments. When you die or permanently move out of the home, you or your heirs sell the property and pay off the reverse mortgage balance.
While a reverse mortgage can be a helpful strategy, there are a few drawbacks to keep in mind. One is that it may not be the right solution if you want to keep the home in the family after you pass away. Your heirs will almost certainly have to sell the home. Also, you’ll need to maintain the home so you can sell it to cover the loan balance. If you can’t afford to keep the home up to date, you may not want to take on a reverse mortgage.
Buy long-term care insurance.
A long-term care insurance policy may be the best strategy for your needs. You pay premiums to an insurer, either in a lump sum or on a periodic basis. The insurer then pays some or all of your long-term care costs if you ever need care in the future. Most policies cover care either in your home or in a facility.
You can adjust the features and benefits on your policy to meet your needs and budget. For example, you can choose the amount of protection, what kind of care is covered and even whether the benefit increases with inflation. Some policies even allow for a death benefit so your heirs receive a portion of any unused coverage.
Ready to develop your long-term care strategy? Contact us today at Timeless Solutions. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
1https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
2https://www.genworth.com/aging-and-you/finances/cost-of-care.html
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18148 – 2018/10/17
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by timelessnc | Oct 24, 2018 | Estate Planning, life insurance, Managing Healthcare Expenses, Retirement Income Planning
Planning for retirement can seem like a complex process, but it tends to bring unique issues for singles. Married couples often benefit from joint pension payments and dual Social Security income streams, as well as multiple 401(k) accounts and IRAs. Single retirees may find it more challenging to plan for retirement without the benefit of a partner’s income and assets.
Increasing amounts of Americans are single as they enter retirement. That’s especially true for women. According to data from the U.S. Census Bureau, more than half of all women age 65 and older in 2014 were single.1
If you expect to be single in retirement, you may face unique planning challenges and issues. One of the biggest could be the need for long-term care, which is extended assistance with daily living activities such as eating, dressing and bathing. Long-term care is often provided either in a facility or in the home and can cost thousands of dollars per month. According to the U.S. Department of Health and Human Services, 70 percent of retirees will need some form of long-term care.2
Unless you have a strategy in place, long-term care could drain your retirement assets. Below are a few questions you can ask yourself to start planning for long-term care expenses. If you haven’t started planning, now may be the time to do so. It’s never too early to consider the risk and your options.
Who will provide help?
Long-term care is often caused by cognitive issues like Alzheimer’s, Parkinson’s or the aftereffects of a stroke. In the beginning stages of these conditions, a spouse may be able to provide much of the necessary support and assistance. That can delay the need for an in-home aide or a move to a facility.
However, single retirees don’t have the benefit of a spouse to help with day-to-day living activities. Consider who could provide assistance if you should develop a cognitive issue. Do you have grown children in the area? What about other relatives, like a sibling or nieces or nephews? Could you rely on friends or neighbors?
Be careful about depending on friends and family for too much help. While they may be willing to pitch in occasionally, you don’t want to be dependent on someone who has other important obligations. Consider that you may need to pay for a full-time health aide if you wish to stay in your home.
Who can make decisions on your behalf?
Incapacitation is another big concern in retirement. Incapacitation is the inability to make or communicate decisions about your finances or health care. Again, this is often caused by cognitive issues.
Without any input from you, your relatives or doctors may be forced to make decisions on your behalf. They may make choices that you wouldn’t make for yourself. You can avoid this risk by establishing written planning documents such as a power of attorney or a living will. These legal documents provide exact instructions on how your health and finances should be managed and who should make decisions on your behalf.
What are your funding options?
A recent Genworth study found that the average room in an assisted living facility cost $3,750 per month. An in-home health aide was more expensive, costing on average more than $4,000 per month.3 How long could you afford to pay those costs out of your retirement assets? Consider that many people need long-term care for several years.
You may want to look at long-term care insurance. You pay premiums today in exchange for long-term care coverage in the future. Coverage varies by policy, but most insurers cover care that’s provided either in a facility or in a home, and will pay some or all of your costs. A financial professional can help you find the right policy for your needs and budget.
Ready to plan your long-term care strategy? Let’s talk about it. Contact us today at Timeless Solutions. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
1https://money.usnews.com/money/personal-finance/articles/2016-09-23/many-women-will-be-single-in-retirement-are-you-ready
2https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
3https://www.genworth.com/aging-and-you/finances/cost-of-care.html
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18087 – 2018/10/1
by timelessnc | Sep 6, 2018 | life insurance, Managing Healthcare Expenses
Are you planning to purchase life insurance? Or are you already in the process? That could be a wise decision. Life insurance is a valuable financial tool that can protect your family should you pass away. Your life insurance policy will provide a tax-free death benefit to your beneficiaries, which they can use to pay debts and medical costs or for financial stability during a difficult time.
Your eligibility for coverage is based on a number of factors, but your age and health are two of the most important. These factors are analyzed during a process called underwriting. During this time, the life insurance company looks at the proposed coverage and analyzes its potential risk. Essentially, it’s determining when you might die based on your age and your health.
Age is an easy factor to quantify. Health is more difficult. Life insurance companies often use questionnaires and medical exams to learn more about an applicant’s health. The result of that analysis can influence whether a person is eligible for coverage. It can also affect your rating and premium amount. The healthier you are, the lower your premium is likely to be.
You can’t change your health overnight, but there are steps you can take to prepare for the exam. Below are three tips to help you get the best rating possible and reduce your premiums or improve your odds for eligibility:
Cut back on bad habits.
You may already know that you have some unhealthy habits. Maybe your diet could use some improvement. Perhaps you smoke cigarettes or regularly drink alcohol. Now is the time to cut back on those habits, even temporarily. By reducing your trips to fast-food restaurants, you could lower your cholesterol. You could cut back on drinking and boost your liver health.
Smoking is an important habit to consider. Most insurance companies have two sets of rates—one for smokers and one for nonsmokers. If you plan ahead and stop smoking well in advance of underwriting, you may be able to qualify for a nonsmoker rate. As you might imagine, the smoker rate is usually higher than the nonsmoker rate.
Go into the exam as well-rested and healthy as possible.
Blood pressure is a big indicator of heart health and an important metric for life insurance underwriters. Since heart failure is a major cause of death, especially among seniors, life insurance companies will place a heavy emphasis on high blood pressure. Take steps in the lead-up to your exam to have a relatively normal blood pressure level.
Try to get a good night of sleep before your exam, and also try to eliminate any ongoing sources of stress. Get that big project finished at work, or resolve the home repair issue you’ve been dealing with. Think about taking a relaxing walk or some other form of light exercise the morning of the exam. Also think about skipping your morning coffee.
Tell the truth.
You may feel tempted to lie about your health or lifestyle in order to qualify for lower rates. For instance, you may not be honest about your tobacco, drug or alcohol use. Maybe you’re considering being dishonest about your participation in risky activities like sky diving or scuba diving. Or perhaps you’re thinking about omitting from your questionnaire a diagnosis you received in the past or a prescription you currently take.
Life insurers often understand that unintentional omissions happen. However, if you pass away and the insurance company suspects that you intentionally misled underwriters or lied during the application process, it may challenge the benefit payment to your beneficiaries. Resist any temptation to omit information from your medical exam.
Ready to protect your family? Let’s talk about your life insurance strategy. Contact us today at Timeless Solutions. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
17965 – 2018/9/4
by timelessnc | Apr 24, 2018 | Managing Healthcare Expenses
Long-term care: It’s the elephant in the room for many retirees. According to the U.S. Department of Health and Human Services, today’s 65-year-olds have a 70 percent chance of needing long-term care at some point in the future.1
Long-term care is extended assistance with basic daily living activities such as eating, bathing, dressing and mobility. It’s often provided in a facility, but it can also be offered in the home via a private nurse or home health aide.
According to a 2017 Genworth study, the average cost of a room in an assisted living facility is $3,750 per month. In-home care may actually be more costly. The average monthly cost of a full-time home health aide is more than $4,000 per month.2 If you aggregate those costs over several years, it’s easy to see how long-term care can quickly deplete your retirement assets.
Compounding the challenge is the fact that Medicare usually doesn’t cover long-term care expenses. It may partially cover a stay in a facility that’s related to a surgery or other medical procedure. However, that coverage is often very temporary. Medicaid will usually only cover long-term care if you have few assets and little income.
Fortunately, you have options available. If you plan ahead, you can develop and implement a strategy to fund your long-term care needs. It may make sense to include an annuity as part of those plans. Below are a few ways in which an annuity can help you pay for long-term care:
Nursing Home Waiver
One of the most prevalent criticisms of annuities is that they don’t offer liquidity to help pay for emergencies. This criticism is usually sparked by surrender charges, which are a common element of annuity and life insurance contracts.
A surrender charge is a penalty you pay if you withdraw more than a certain amount from your contract in any given year. Surrender penalties are in place for a certain number of years determined before signing the contract of an annuity. Surrender periods can last from three to even ten or more years. After that period is up, there are no more surrender periods.
However, many annuities offer something called a nursing home waiver. This feature gives you the opportunity to access your contract without paying a surrender penalty if you have to stay in a nursing home or an assisted living facility. You gain instant access to your contract so you can use your funds to cover your long-term care needs.
Annuitization
One of the primary benefits of an annuity is that it can generate a reliable income stream that’s guaranteed for life. This is done through a process called annuitization. Essentially, you ask the annuity company to convert your assets into a lifetime income stream. This can be done when you open the contract or after you’ve owned the policy for months or even years.
To calculate your payment amount, the annuity company will consider the amount of assets, your life expectancy and other factors, such as prevailing interest rates. It will then pay you a fixed amount every month for the rest of your life. The payment is guaranteed, no matter how long you live.
This kind of income certainty can be helpful for any retiree, but it can be especially helpful if you need long-term care. The fixed payment gives you confidence that you can continue paying for your facility or your home health aide.
There are also instances in which annuitized income doesn’t count as a Medicaid asset. That means you may be able to receive your annuity income and also receive Medicaid benefits to pay for your care. However, these rules are complex. It’s wise to consult with a financial professional before embarking on this strategy.
Annuity-LTC Hybrids
Finally, many annuity providers have recognized the need for long-term care strategies. They have responded by introducing annuity-LTC hybrid policies. These contracts provide a blend of long-term care insurance and annuity income.
You fund the policy with a lump sum, just like you would with any other annuity contract. If you ever need care, the long-term care component can be utilized. It pays for some or all of your care, depending on the terms of your policy. If you don’t need care, you can use the annuity to provide retirement income or as a legacy for your beneficiaries.
Ready to develop your long-term care strategy? Let’s talk about it. Contact us today at Timeless Solutions. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
1https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
2https://www.genworth.com/about-us/industry-expertise/cost-of-care.html
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
Annuities are insurance products backed by the claims-paying ability of the issuing company; they are not FDIC insured; are not obligations or deposits of, and are not guaranteed or underwritten by any bank, savings and loan or credit union or its affiliates; are unrelated to and not a condition of the provision or term of any banking service or activity
Guaranteed lifetime income available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Annuities are long-term, tax-deferred vehicles designed for retirement and contain some limitations.
17507 – 2018/3/26
by timelessnc | Apr 10, 2018 | Managing Healthcare Expenses
If you’re approaching retirement, you may be in the process of developing a budget and determining how you’ll fund your cost of living. You’ll likely face expenses for things such as housing, food, utilities, travel and more. You may also face costs for things like taxes and debt.
Health care, however, is one major expense category you shouldn’t ignore. Many retirees assume that Medicare covers all health care costs. That assumption is usually incorrect. In fact, Fidelity estimates that the average retired couple will spend $275,000 on out-of-pocket medical expenses.1 That figure doesn’t even include the cost of long-term care.
The truth is that Medicare doesn’t cover everything. In fact, there are some services that aren’t covered by Medicare at all, and many are only partially covered. You’ll have to pay the difference, possibly out of your retirement assets.
This can be a difficult challenge for retirees. As you get older, your risk of suffering an injury or illness increases. While you may want the best treatment possible, you also have to preserve your assets to fund the rest of your retirement.
The good news is you can take steps to manage your health care expenses and protect your budget. Below are a few of the most common sources of health care costs in retirement. By understanding your potential medical expenses, you can develop a funding strategy.
Medicare Premiums, Deductibles and Copays
Medicare is available to all retirees age 65 and older. However, it isn’t free for all retirees. Medicare is divided into multiple parts, each of which offers different coverage. Part A covers hospitalizations and doesn’t have a premium. It does, however, come with a copay, which increases the longer you are hospitalized.
The other Medicare parts—B, C and D—are all optional and come with premiums, deductibles and copays. Those amounts depend on your level of coverage. The more robust your coverage, the higher your premiums are likely to be. You can reduce your premiums by changing your coverage, but doing so may increase your deductible and copay.
Noncovered Services
There are many services that are covered by employer plans but aren’t covered by Medicare. Some of those services include dental, vision, hearing, rehabilitation, physical therapy and more. If you have traditional Medicare parts A and B, you’ll have to pay for all those services out of pocket.
You can purchase optional Medicare protection for those services through Medicare Part C, also known as Medicare Advantage. These are policies offered by private insurance companies. Medicare Advantage policies include traditional Medicare protection plus enhanced coverage for additional services.
Of course, since Medicare Advantage is optional, it also comes with additional premiums. There are a wide range of Medicare Advantage policies available, so it’s important to consider your specific needs, budget and objectives before purchasing a policy.
Long-Term Care
The U.S. Department of Health and Human Services estimates that today’s 65-year-olds have a 70 percent chance of needing long-term care in the future.2 Long-term care is extended assistance with daily living activities such as eating, bathing, mobility and more. It’s usually provided either in a facility or in your home.
As you might expect, long-term care can be costly. According to Genworth, the average monthly cost for an assisted living facility in 2017 was $3,750. The average cost of an in-home health aide was more than $4,000.3 Because long-term care may be needed for several years, it can be a drain on your assets.
It’s helpful to develop a long-term care strategy before you enter retirement. You may consider purchasing long-term care insurance, in which an insurer covers some or all of your costs. Or you may want to accumulate funds in a health savings account to cover medical costs and long-term care expenses.
Ready to develop your health care funding strategy? Let’s talk about it. Contact us today at Timeless Solutions. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
1https://www.fidelity.com/viewpoints/retirement/retiree-health-costs-rise
2https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
3https://www.genworth.com/about-us/industry-expertise/cost-of-care.html
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
17508 – 2018/3/26
