“I’m curious: who’s budgeting for the likelihood of living a long time (into one’s 80s or 90s), being increasingly frail, possibly developing dementia (one-third of people over age 85), and spending some amount of time in a nursing home at the very end of life?” - We have LTC policies (covers nursing home and/or in-home care). That is a small hit to our budget (now and after retirement). But for us it was worthwhile not having to budget for a TBD large expense down the road.
The LTC policies that I’ve read were not very attractive and we opted not to purchase them. We do have several sources of income that should last beyond our lifetimes that will be able to help defray costs of aging and getting frailer.
All the LTC policies I read had a cap on the total amount of benefits and/or the length of time benefits would be paid out, so for folks who live a long time with dementia, I’m not sure that LTC policies are necessarily as complete a solution as one might hope, since folks can live a very long time while needing a LOT of help, including 24/7/365 assistance.
Other than saving as much as one can and having several streams of income that will continue for your and spouse’s life time, I’m not sure how one can totally “plan” or prepare for these scenarios.
LTC is not the right answer for everybody. In our case, we had decent rates via an employer plan (employee and spouse). There is a cap of $216K per person. That would be gone in a few years of nursing home. We liked the fact it could also be used for in home care. No plan can be a sure thing for the tbd future. You just need to tailor toward what you think gives best odd for the particular situation,
That’s great that you had it via an employer. That seems unusual that an employer offers it, you are lucky to have had it. When I checked into it on the open market, the rates were high, the benefits were limited, and I thought…what if I lose my mind and can’t figure this stuff out? It just goes to waste when they have complicated procedures, I think. My MIL had a policy that she didn’t even know about, that they’d paid on for years. It was only discovered when one of the kids went through her paperwork after she had a heart attack. But funny, though, even though it’s free to use, she doesn’t want anyone coming over to her house, so the kids virtually force her to use it. She always wants them to come less, and they will do anything for it. Drive her places, clean her refrigerator. I don’t understand. Send someone over here, please!!
I found that my parents’ LTC policies required that they be unable to perform two of the five activities of daily living. (I think I am quoting this correctly.) Further, there was a 100 day elimination period during which they had to have received care or been hospitalized for at least one day per week. Once those 100 days were up, assuming care had been delivered weekly, the plan would begin to pay benefits. One plan had $300K lifetime max and one had $500K.
One would need the ‘right’ illness to collect on the policies. I am still not sold, but my mother continues to pay her annual premium.
Yes, different policies require different numbers of activities of daily living that can not be performed by policyholder and waiting/elimination period. I met with agent and he agreed with my understanding. It is helpful if people are paralyzed or demented. Many others can perform most activities of daily living as defined by policy most of their lives, even if they may need help preparing food, shopping, remembering to eat, remembering to take Rx, none of which are activities of daily living.
Well I passed. But should have gotten a better score given I am 63 and have met with a financial advisor.
All of the decisions of what to do with your money upon retirement is very difficult. Meeting with advisors can be stressful because they seem hard sell. Ours, TIAA, claim they do not work for commission. Yet they seem to push certain things such as life insurance and real estate funds.
Here’s what H and I want–To have close to the income we have now. Their models indicated there is a good chance we could. I also want to make sure that our kids inherit whatever we do not spend. If we choose a guaranteed
anunity that won’t happen if we die young. And I’m not sure what to do about life insurance.
I need to learn more about this obviously. When my Mom died I, the youngest of four, was named the executor of the estate. I had to learn and deal with a s-load. But I did, in two of the most difficult years of my life.
Retiring will be another learning experience. Why is the end of our life so damn challenging, never mind the health issues we may also be dealing wiith? I have read that suicides are highest among the elderly. I am not in any way saying that I am considering suicide. But I am beginning to understand why some elderly feel this is the best or only
option for them unfortunately. So very sad.
The test pushed annuities and life insurance because the sponsor sells such products. Each person has to look at their own situation. If you have streams of income–SS, pensions, dividends, rentals, etc., it can offset your expenses.
Don’t be obsessed with a huge number you have to save–look at what you currently spend and are likely to spend after retirement. Spending may ramp up initially for travel, then fall when you aren’t as interested or able to travel and then increase as you jay need to hire help and pay Med expenses.
Always be aware of biases of info you get–are they selling something? How will that affect advice.
I started taking that test, and it did look like it was pushing annuities and life insurance. So I decided it was a sales pitch and gave up. I’m pretty firmly against annuities, so I’m sure I would have flunked their test!
I took the test for general info. I didnt care too much whether I got the it all right but felt it was interesting.
In general I feel I am well-enough informed about financial issues for myself and H and our kids. I really am not interested and don’t care about pensions, life insurance, SS or LTC insurance, but feel I know as much of each of those topics for my purposes.
The main thing is I’m convinced H and I have enough to never be a financial burden to our kids. That means a lot to us. This has been confirmed by two independent financial advisors–one was a fee only and one was Schwab.
I guess it’s always informative to figure out who is giving a “test”. What it is that they are selling.
If one feels happy enough with the information that they have, based upon their own personal needs, that should be good.
I’m also firmly against annuities, and think that, except for Single Premium Immedate Annuities (SPIA), most of them are prima facie evidence that the seller is a liar, crook, or ignorant (sometimes all 3). But, in certain circumstances, a SPIA is what the doctor ordered, because the mortality credit might be enough to get them from insufficient income to sufficient. Anyway, that said, my weaknesses were on LTCi and Medicare/Medicaid, so I had better learn about Medicare so that I don’t make a mistake when the supplemental insurance is pitched (after DW’s company provided insurance goes away).
Re LTCi: I’ve read many stories of family members struggling to get payouts for their loved ones; it turns my stomach. These were “lawyerly” kids, kids who can understand where the comma goes, but who banged their heads against the gotchas that the insurance company places in the path of getting paid. People with dimished capabilities, arguing on their own behalf, have zero chance. I’m running out of circles of hell, but the LTCi companies get one to themselves.
If I’m in a LTC facility, based on the meager payouts I’m reading about, I’m saving money. I’m not buying a new Tesla, going to Iceland, eating at wonderful restaurants, etc.
Here is one statistic, which is as likely to scare you as to help you with retirement planning: the figure that my state uses (for making various Medicaid determinations) as the average monthly private-pay rate for a nursing home is $7,880. I live in a state with good health care but definitely not the highest cost of living.
I’m not interested in a moral discussion, but my father, his twin, their father, and probably a few generations back took the approach that they didn’t want to live beyond a certain point. They believed in rational suicide, where if you could convince a few loving family members that you were considering it rationally and not from depression, then it was okay to do so. In my father’s situation, he presented the case that, with colon cancer, he did not want to die in pain and without dignity. His doctors, for whatever legal or moral reasons they chose to value more than their obligation to their patient, could not reassure him that, when his time came, they would do what needed doing. I think we lost a few months with my father as a result, but he chose to act when he was sure that he could hold the pills down. Those few months go on the doctors’ ledger as a debit.
@rosered55, the upside to living below our means is that the $7,880 figure does not scare us. I think it would scare me if I were relying on LTCi.
I don’t think you can blame doctors for that. If they are at risk to be accused of committing a crime, losing their license or getting sued, I wouldn’t expect them to take action to hasten death. If I was in that situation, I might ask my spouse/children to ensure I didn’t suffer, before I’d ask a doctor to risk themselves.
I am sorry about your father’s suffering. It does make the case for assisted suicide when one is still able to make that decision, to release the doctors from fear of liability or prison time.
LTC and Disability Insurance - even a decent company is going to push the envelope. I had stage III cancer, and a disability policy that they were trying to wiggle out of paying on - including having a retired FBI person who handles our region come to my home to assess me (I had a retired government employee/friend here to be another set of eyes and ears, and also talk the lingo with this fellow); then the claims person told me their doc was denying my claim; I said “my board certified Oncologist has rated me 8 on pain, 8 on nausea, and 8 on fatigue”. I told them I was calling my attorney in the morning; the next morning they called and approved my claim.
On LTC, the company cannot fight dementia/Alzheimer or things like paralysis. So once those criteria are met, automatic payout.
It is ridiculous about how some insurance operates.
However, with death, the good thing is a life insurance policy typically pays out very quickly once they receive the death certificate.
My aunt had died of lung cancer shortly before o met the LTCi guy about what was required for layout of benefits. She had paid for decades and was in great paid for a lot of the last months of life. They finally paid – for her last month of benefits only because they claimed she could still slowly and painfully do the activities of daily living before then, never mind that it caused excruciating pain and she needed assistance to function for everything else.
I decided H and I want to hire the help we want when we want, not beg any insurer to let us hire someone when they decide we are sufficiently debilitated. Payouts in the policies I was looking at were relatively low and premiums were already very high.
Even tho we live in a very high cost of living area, we can afford whatever help we need as we have sufficient streams of income now and in the future to offset costs.
LTCi is a huge moneymaker for the insurers–they charge very high premiums and do everything not to pay.
That’s awful, HImom, for your aunt. Reinforces what I thought. Never understand when I hear Dave Ramsey telling everyone to get it. He should know better, that it’s not right for many,
In real life, most of the females end up providing varying levels of caregiving for aging relatives, sometimes males do as well.
When I need it, I plan to pay for meals to be delivered to us at restaurants we like. I think that’s much cheaper than hiring a chef.
Long term care is very expensive and scares most folks. It can definitely take all the assets that the couple has accumulated over their lifetime, but isn’t that one of the reasons one accumulates assets? If loved ones WANT to provide care so that more assets are spared, that seems reasonable, but to scrimp and do without so one can leave behind a bigger estate seems to impose a greater burden on everyone.
Dave Ramsey has some generalized statements that aren’t true or right - in part because he is not expert in many areas. Most people won’t qualify for LTC insurance at age 60, but he has stuck in his head about the increase of need for it by that time versus when one is healthy enough to pay lower premiums and also qualify. But at this point LTC insurance is way too pricey for the benefit IF you ever need it. Better to ‘self insure’.
I was 52 with stage III cancer. Had a LTC ins policy in place 6 years earlier - a policy that was reasonable in cost, and with lifetime benefits - no cap on $$ or time. I never could have gotten if I waited to age 60.
Will the ins co give us grief if and when it is time to utilize the policy benefits - no doubt, unless one of the automatic categories like dementia/Alzheimer’s.
Living close to children/grandchildren/other family can help with aging in place.