How to Financially Prepare for Retirement

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Heading into retirement, many people are as fearful as they are excited about this new chapter in life. Have I saved enough? Should I downsize? What if I need long-term care? These are all valid questions. The reality is that although most of us will need some form of assistance eventually, you simply can’t predict what’s ahead. But you can prepare financially for the what-ifs. Here are some tips to guide you.

Take Stock of Your Current Funding Sources

  • Your Home — Find out its market value and consider whether you might be open to selling or renting it if needed.
  • Savings — Do you have rainy day funds available? What about stocks, bonds or annuities?
  • Income — Do you receive a pension or Social Security? Are you paid dividends from stocks?

Offsetting the Cost of Long-Term Care

In addition to your current assets, there are other funding sources available which can help offset the cost of long-term care:

  • Reverse Mortgage — A type of home equity loan for homeowners 62 or older who want to remain in their home while accessing its equity to supplement income in retirement. The lender makes payments to the borrower based on a percentage of accumulated equity and the loan must be repaid when the borrower dies, sells the home or permanently moves out.
  • Veterans Aid & Attendance Pension Benefit  — Wartime veterans or a surviving spouse with limited income may be eligible to receive a non-service connected pension (above the basic pension) to assist in paying for assisted living, home health care, adult day care or skilled nursing. 
  • Long-Term Care (LTC) Insurance — LTC insurance helps to pay for the cost of home care, adult day care, assisted living, memory care, skilled nursing and hospice by covering services typically not covered by health insurance, Medicare or Medicaid.
  • Life Insurance Conversion — Anyone with an in-force life insurance policy can transform it into a pre-funded financial account that disburses a monthly benefit to help pay for long-term care needs such as home care, assisted living, skilled nursing and hospice. 

The National Council of Aging also has a free service known as BenefitsCheckUp® that provides a list of benefits in which you may qualify by scanning more than 2,500 federal, state and private programs based on your criteria.

Understanding the Costs

We’ve presented ways to pay for long-term care, but what exactly is it and what can you expect in terms of cost?

Long-term care is defined by the National Institute on Aging as services designed to meet your health or personal care needs during a short or long period of time. These services help you live as independently and safely as possible when you can no longer perform everyday activities on your own. This type of care can be provided at home, in a senior living community that offers assisted living, memory care or skilled nursing or, in some cases, in an adult day care center.

According to the Genworth 2018 Cost of Care Survey, the average monthly costs for long-term care are as follows: 

  • Homemaker Services — Help with household tasks that cannot be managed alone; $4,004
  • Home Health Aide Services — “Hands-on” personal care, but not medical care; $4,195
  • Adult Day Health Care—  Social and support services in a community-based, protective setting; $1,560
  • Assisted Living — A residential arrangement providing personal care and health services; Private, one-bedroom: $4,000
  • Nursing Home Care — Often a higher level of supervision and care than in assisted living with onsite nursing 24/7 (also known as skilled care); Semi-private room: $7,441, Private room: $8,365

Note:  Many Vitality Living communities have assisted living available starting at under $4,000

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Doesn’t Medicare cover Long-Term Care?

It’s a common misperception that Medicare, Medicaid and/or your health insurance will cover long-term care costs. In fact:

  • Medicare — Only pays for long-term care if you require skilled services or rehabilitative care and there are time limitations around that.
  • Medicaid —Does pay for the majority of long-term care services, but to qualify, your income must be below a certain level and you must meet minimum state eligibility requirements based on the amount of assistance you need.
  • Health Insurance — Typically covers only the same kinds of limited services as Medicare. If they do cover long-term care, it is typically only for skilled, short-term, medically necessary care. 

Care at Home versus Senior Living

After initially looking at long-term care costs you may automatically write-off senior living, thinking at-home care will be less expensive. For a true comparison, you must go deeper to consider the total cost of living at home. Don’t forget that your monthly expenses go beyond mortgage or rent to include the cost of food, utilities, home maintenance, property taxes, insurance, and entertainment — these things are typically included in the monthly cost for senior living. Then factor in the cost of at-home care and/or modifications to make your home more accessible and you may find senior living is the more cost-effective option.


But the real value of senior living may be a positive impact on your life. You’ll enjoy a range of social and enrichment opportunities, a worry-free lifestyle with no unexpected expenses, chores or maintenance and an environment designed specifically to balance your independence with support as health needs evolve. Senior living is a great way to prepare for the what ifs financially and give yourself peace of mind.

Download our Staying Home vs. Moving to Senior Living Guide or schedule a tour of a community near you today!

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