<p>“mini–really–how much do you have set aside for long term care? You would rather pay out of pocket for something like that then leave your money to your kids/charities, etc.?”</p>
<p>I probably have $400k for that purpose as of right now, and it continues to mount up. Maximum 403bs plus maximum Roth IRAs in standard, plain vanilla, low cost mutual funds, tax-free, no middle man, no sales costs, no actuaries arrayed against me. It will probably triple by the time I ever need it. </p>
<p>(As for my kids, they can fend for themselves. Though the reality is that there will likely be plenty for them too if I don’t figure out a way to give it away more quickly.)</p>
<p>From DStark’s link:</p>
<p>"The Odds of a Long Nursing Facility Stay</p>
<p>Most people will not spend years and years in a nursing facility.</p>
<pre><code>Two-thirds of all men, and one-third of all women, age 65 and older will never spend a day in a nursing facility.
Most nursing facility stays are brief – only about 10% of men and 25% of women age 65 and older spend more than a year in a nursing facility.
Only 10% of all nursing facility residents will stay longer than three years.
More than half of all nursing facility stays last six months or less. The average stay of those who enter a custodial care facility is about 18 to 20 months.
</code></pre>
<p>The Performance of Long-Term Care Insurance</p>
<p>The relatively slight chance that an elder will need three or more years of nursing facility care means that insurance companies do not pay out on their policies to nearly the extent that they suggest when they sell the policy. When the policies’ conditions, exclusions, and benefit limits are figured in, the performance of these policies has been quite poor – at least in the decade of the 1990s, for which complete statistics are available:</p>
<pre><code>About half of all LTC policies lapsed before any benefits were paid; policy holders were unable or unwilling to continue paying their premiums.
Of those people who bought insurance and later entered a nursing facility, about half never collected a dollar from their LTC policies.
No benefits were ever paid to the many people who bought nursing facility coverage but instead received home care or entered a residential facility not covered by the insurance.
When LTC benefits were paid, they were usually far below the actual cost of care.
For many of the longest-term residents, benefits were used up before the nursing facility stay ended.
</code></pre>
<p>In all of these situations, LTC insurance failed to live up to its promise to help people avoid using up their savings or relying on Medicaid to pay for long-term care. In other words, it was a lousy investment.
Improvements in LTC Insurance</p>
<p>In response to pressure from consumer groups, embarrassing media exposure, and increased competition from other insurers joining the market, LTC policies have improved somewhat in recent years. These improvements include clearer terms and conditions, which give consumers a better idea what to expect for their money. Many policies now offer extended coverage to include some types of assisted living residences in addition to regular nursing facilities. A number of policies permit elders to use a pool of benefit funds for either home care or residential long-term care, rather than only for one or the other. Requirements to qualify for benefits have also been loosened somewhat, and policies now routinely permit the policy holder to “step down” to lower levels of coverage, for a lower premium, if continuing to pay for the higher benefits becomes too financially burdensome.
Deciding Whether to Buy LTC Insurance</p>
<p>Consumer and financial experts generally agree that LTC insurance is a bad investment unless the monthly premium is 5% or less of your monthly income. When calculating this 5% figure for future years, bear in mind that your premiums are likely to rise, while your income will probably drop."</p>
<p>Now, to be fair, I also have another “out”: my home in rural South India.</p>