Of all the strains on your retirement assets, one of the biggest threats to your financial independence is the need for long-term care. Without knowing the future it can be difficult to budget how much care you’ll need and for how long you’ll need it. With this uncertainty, does it make sense to have a long-term care policy to cover the cost? Consider the questions below to help you in determining whether purchasing a policy or self-insuring makes sense:
At what age should you consider purchasing a long-term care policy?
Age is an important factor when purchasing a long-term care policy. If you are looking for the optimal age to purchase a policy, typically between ages 55 and 65 makes sense to get the best combination of benefits and overall outlay for insurance premiums. After age 65 the cost is usually prohibitive.
Do you have an accurate picture of your family’s longevity?
No one can tell with complete certainty how long they will live, but you can gather clues based on your bloodline. If you have a history of family members living well into their 80’s and 90’s, purchasing a policy may be advantageous to ensure your retirement assets aren’t drained should you live a long life and need care.
Do you plan to leave an inheritance?
If you are looking to do legacy planning after your passing, a policy could make sense to ensure heirs receive more of their named benefit. If you don’t have dependents or plan to draw down your assets, self-insuring could make more sense.
How do I prepare to self-insure?
If you choose to forgo insurance, consider utilizing an HSA for qualified medical expenses now and in retirement. This allows you to take advantage of tax-free contributions and distributions if used for qualified medical expenses. If you have a High Deductible Health Plan, consider this option as you build your assets for medical expenses in retirement.
The decision on whether to purchase long-term care coverage depends on multiple factors, and the ultimate decision varies by individual. Interested in learning more about whether long-term care insurance is for you? Join us July 13th as Francis LLC hosts “All About Long-Term Care,” a live webinar designed to inform you on the details of long-term care and what action you need to take. Click here to register.
