3. You may—or may not—need life insurance.
If you have enough assets, and are not looking to replace them if you or your spouse or partner were to die, you may not need as much life insurance as you once had. But when looking at the direction of the economy, you’ll need to ask yourself, “If something happens to me, will my spouse or partner have to change their lifestyle due to insufficient assets?” If so, keeping your life insurance may make sense. Think of it this way: by having the life insurance it puts you in the position of “being the bank” instead of “having to go to the bank” when the need for money arises.
The bottom line is that as you approach retirement, you need to look at the future with clear eyes, considering all the “what ifs.” Then be sure to sit down with an advisor or agent who can help you mitigate those what ifs with the proper type and amount of insurance and planning.
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2. Health care costs are going to be a major factor in retirement.
This year the premiums for Medicare went up significantly, while Social Security benefits went down for anyone who is making more than a specific, although limited, amount of money. I’ve found that most people have not planned for the rapidly escalating cost of medical care in retirement. A person’s future medical expenses are going to be the great unknown. But here is a figure that can help you put things into perspective. Fidelity’s Retirement Health Care Cost Estimate shows that a couple, both aged 65 and retiring this year, can now expect to spend an estimated $245,000 on health care throughout retirement. Are you prepared for this?
In the next few days we will discuss 3 Things to Think About Now!
If you think your retirement is going to look like your parents’ or grandparents’ retirement, think again. Here are three things you should be considering:
1. The Bank of Mom and Dad won’t always be open.
There are two sides to this. If you’re currently supporting your adult children, you’re not alone. According to a BMO Wealth Institute study, 81% of parents say they have provided their adult children with some financial support. However, you’ll want to evaluate if that’s possible to sustain in the long-term. Ask yourself: Will helping my adult child (buy a house, afford a vacation, transition to a new job …) put my own financial future in jeopardy?
If you answer, “No, it won’t harm my financial well-being” then it’s OK to continue your support, as long as you have the assets to back it up and your financial position doesn’t deteriorate in the future. But if you realize that continuing to support your children means financial sacrifices on your part and lowering your own standard of living, then you need to have a frank conversation with them. I’d also like to suggest that financially supporting your adult children long term sends the message that you really don’t have confidence in them.
Now, the other side of this. If you are on the receiving end of money from your parents, just know that the escalating costs of health care in retirement, market volatility and other factors, may shut down your parents’ largesse, or potentially wipe out any inheritance they might have liked to pass along, whether you or they like it or not. Fewer than half of the BMO study respondents said they would sacrifice their own financial well-being to financially support their children. Bottom line: Relying on your parents is not a solid financial plan.
6. Long-term care insurance carriers paid $7.8 billion in benefits last year.
According to AALTCI, carriers paid a record $7.8 billion in claim benefits to 250,000 individuals in 2014, up from $7.5 billion the previous year. You can interpret this number a couple of ways: People are living longer and more care is needed, or the cost of care is increasing, which are both true. But it also shows that long-term care insurance is working. It’s helping families provide care for their loved ones in a setting that they prefer and protecting their finances.
I encourage you to learn more about long-term care insurance and why it’s a critical piece of retirement planning. Ask your financial advisor about these and other features and how it has helped their clients like it helped 250,000 families last year.
5. It’s not “just for older people.”
While it’s a critical part of retirement planning and important protection for your later years, the younger you are when you apply for long-term care insurance, the better. Age and health are two of the most important factors when applying, so applying at a younger age will help make it more affordable, and you are likely more insurable from a health perspective. Additionally, accidents and illnesses can happen at any age and include the need for extended personal care. Planning ahead can really pay off.
4. It offers shareability for couples.
Many long-term care insurance policies offer an optional benefit commonly known as “shared care,” which allows couples to share their coverage and maximize their benefits. Here’s how it works: if one spouse exhausts his or her benefits, he or she can begin using the other spouse’s benefits. This provides couples with peace of mind knowing that their coverage will be there if care is needed for longer than expected. It typically also includes a built-in protection to ensure a surviving spouse can still receive long-term care insurance benefits.
3. It supports family caregivers.
Long-term care insurance recognizes the important role family caregivers play in long-term care situations by offering options that can make it easier for families to care for the ones who cared for them. Most policies provide caregiver training for family members, which helps ensure care recipients are getting the best care possible. Other policies go the extra mile by recognizing family caregivers, and even family friends who provide care, as informal caregivers, making their time and services reimbursable under the policy.
2. Benefits can be tremendously flexible.
In addition to options for where care is received, most long-term care insurance policies offer greater flexibility in the types of services available, such as home modifications like installing grab bars or a wheelchair ramp to help you stay at home longer and safer; or other care-related products and personal supplies, like a lift chair or hospital bed.
In the next few day we will discuss 6 things you didn't know about Long- Term Care Insurance..
When you think of long-term care insurance, what comes to mind?
Unfortunately, some people hold certain misconceptions or have an unfavorable opinion of long-term care insurance, largely stemming from issues related to its early days. But that was then. Today, there are more options focusing on straightforward and flexible long-term care solutions. Let’s take a look.
1. You decide where care is received. One of the most common myths is that long-term care insurance only provides nursing home care, and nothing is further from the truth. It provides home care for those who prefer to “age in place,” as well as care at adult day care, assisted living facilities and hospice centers. In fact, most newly opened long-term care insurance claims are for home care, according to the American Association for Long Term Care Insurance (AALTCI).