As parents, we’re so focused on taking care of our children that making plans for our own care can come in as a distant second. But planning for your long-term care in retirement could be well worth the effort.
For example, did you know that someone turning 65 today has almost a 70% chance of needing some form of medical or living assistance as they age? That help can come with a hefty price tag that can impact you and your loved ones if you’re not prepared. How much? The average projected lifetime healthcare cost for a couple retiring as recently as 2015 was $266,589.
The good news is that you have options. Knowing what your options are now and planning ahead can help you avoid needing help later.
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Some of your long-term care options include:
Knowing about your long-term care options is one thing, but how best to pay for them?
You may already have an option for long-term care in your insurance policy. Carefully read your agreement to see if you’re covered or give your agent a call to walk through it.
Generally, long-term care insurance (LTCI) covers adult daycare, home-health care, time spent in a nursing home or personal care for people over 65. LTCI can also cover people who have a chronic or disabling condition that requires constant supervision. But long-term care policies can be complex with expensive annual premiums that increase over time. If you’re thinking about such a policy, be sure to comparison shop, buy early to keep your premiums low, and see that it covers as many types of long-term care as possible.
If you’re in a high-deductible health plan, you might have access to a health savings account (HSA). An individual can save up to $3,250 in pre-tax income annually and can also roll over your balance each year so your funds can accumulate. Plus, you aren’t taxed at withdrawal either. Check your current health care plan for an HSA option. It can be a great way to save for future healthcare needs.
You could increase your contributions in your individual retirement account or your employer-sponsored retirement plan to pay for your future long-term care needs. You’ll continue to receive tax benefits while growing your account. If you need money for medical expenses before you reach age 59-½, you may be able to take advantage of an exception to the 10% early withdrawal penalty that allows you to take money out for certain medical expenses.
Depending on your finances, you may qualify for Medicaid — or if you’ve served in the military, you may qualify for veterans’ benefits. If those options aren’t available, check with your current employer to see about retiree medical benefits.
If you’re not sure which long-term care option is right for you, consult your financial advisor, who can help you weigh the options and select the best one for your specific situation.
Planning ahead today can help ensure that you have options when you are older and need some additional form of care.
How are you preparing to pay for long-term care when you retire? We’d like to hear your stories and tips in the comments below.