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Preparing for eventual care needs as we age is becoming a critical part of every American’s retirement planning. Retirees are living to a more advanced age, and funds need to last longer than ever before.
The further in advance you plan, the better off you are likely to be if and when you need long-term care or face other major healthcare costs.
Planning your future
It’s hard to tell someone who is approaching retirement that he or she might have to plan for long-term care needs in the future. It’s a little like telling high school graduates that they might need to start saving for their children’s college education. After all, someone who is 60 years old and approaching retirement might not need long-term care for at least another 20 years.
But planning is important. You’ll likely find it easier to purchase things like long-term care insurance while you’re still working rather than trying to handle those expenses while living on a fixed retirement income.
Making the decision as a family
It is very common in the case of an elderly parent that one child, often one living close to home, begins to take control of that parent’s finances and helps him or her make long-term care decisions, such as whether or not to move into an assisted living home. Many times, other siblings may disagree with the decision, which can lead to family issues.
Competing family members will have different interests at heart, ranging from spiritual and moral to practical and financial. Make plans with which everyone can agree, and ask for help from medical professionals to ensure the family member’s healthcare and best interests are at the forefront of the discussion.
Handling different financial decisions
Seniors moving to assisted living are in a wide variety of financial situations. Those who had profitable, relatively high-earning careers may have savings and home equity, which they would like to pass to their children. Others will be living on limited fixed incomes, unable to afford the high cost of assisted living.
Exploring options, such as state Medicaid programs, is always a good idea. Even if you have assets, you may be able to reassign some of your resources to another family member or to a trust in order to qualify for Medicaid at a later time.
Each state has different requirements and rules for such financial transactions, and it is absolutely critical to speak with a financial planner or elder law attorney who has experience dealing with these issues. Making the wrong decision can have serious financial repercussions.
Knowing what you can afford
Determining what kind of care you or a loved one can afford is not easy, but the reality is that most of us cannot afford the most posh facility in our area. Assisted living can charge up to $8,000 per month in some areas, but there are usually some very nice communities to choose from in the $2,000 per month range. There is very little rhyme or reason to the pricing of assisted living, so it’s important to spend some time shopping for the community that offers the best care at the best price.
Jacob Edward is the manager of Senior Planning in Phoenix, Ariz. Jacob founded Senior Planning in 2007 and has helped many Arizona seniors and their families navigate the process of long-term care planning. Senior Planning provides assistance to seniors and the disabled finding and arranging care services, as well as applying for state and federal benefits. In his spare time, Jacob enjoys dining out and supporting his alma mater Arizona State’s Sun Devil sports teams. Jacob lives in Tempe, Ariz.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.
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