While Hubby and I seem to be on track for retirement, since we have no kids, we've been told we should consider LTC plans. Now, I'm ignorant on the subject and, for some reason, reading up on it is putting me to sleep. Anybody have advice, what to specifically look for or against?
Did a doctor tell you this, or was it part of a sales pitch from a retirement home representative? I'm over 60, no kids, have some health problems, and live alone. Unless I suddenly drop dead, I'll probably have to consider the same thing. Unfortunately, since I have no money and haven't even considered getting a burial plot, I'll wind up in the furnace. I had a friend who worked as some sort of caregiver in different retirement homes, so I may eventually have to consider looking her up and hiring her.
An LTC policy is a way to protect your assets in retirement from the risk of needing extended care outside of a hospital, i.e. a nursing home, assisted living, or home health care situation. The risk is that you need extended care in some form or fashion for some period of time in retirement. When faced with a risk, one has three choices - ignore it, fund it, or transfer it. In CA, the average annual cost of care runs from $50k for unskilled care (think cooking, cleaning, and the like) to $98k for a private room in a skilled nursing facility. LTC is insurance that takes on that risk so that you don't have to deplete your assets or be forced into a state funded facility. But wait, you say, the insurance is $6k a year for both of us, what of we never use it? Fine, but how many years of premium would you have to pay before you would equal one year in ahome's cost? The answer, btw, is 16. Even if you paid premiums for 30 years, two years in a home and you break even. LTC is an incredibly complicated product and you should visit with an insurance agent who specializes in it, so not the guy who does your car and home insurance either, or a CFP who is able to fold it into our overall retirement plan.
^This. It is definitely worthwhile, especially if you don't anticipate some wealthy relative will foot the bill or adult children to look after you. If you can afford the premiums, which you can, then you should definitely look into it. I would recommend NOT getting any type of policy that is company-specific (only for certain corporations care homes) but you should certainly ask your insurance rep. what info he has and compare the policy with a few others.
^Agree with both of them. I work in the industry and oour smallest apartment with the most basic of assisted living help is $5000 a month ($60K per year). We have two additional levels of assisted living at about $1.5K per month more per level and we don't even offer the highest levels of skilled nursing care or any kind of memory care. Trust me, it adds up fast. LTC is a good thing and I encourage you to obtain it. I will be doing so myself in just a few years.
My two best friends are both senior citizens in their 60s and 70s, respectively, they have advised me on occasion to look into long-term care. Though not wealthy, they are both financially independent. Now granted, I'm more than half their age and have got a loooong ways to go before retirement, way too long. I figure I don't need it now or won't need to start thinking about it for at least a couple more decades. Besides, I need the money now when I'm still young enough to enjoy life. My pension should be sufficient along with Social Security (assuming it's still around when I retire), provided that I would live a simple lifestyle and stay healthy. On the other hand, I'm diabetic, so anything could happen. At least if I die at a young age, I wouldn't have to worry so much about my future financial situation, one way or another.
I don't know a lot about them but I do know that you typically buy it in your mid-50s. Also, it's expensive but worth it. If you need it but don't have it, you're well and truly fucked. You'll end up living your last days (which can be quite a long time) broke and in some dumpy, bottom tier facility. Mr Awe