Many people live independently into their early 80s, but one slip, trip or fall can lead to drastic lifestyle changes. Having a plan in place can make a stressful situation feel manageable.
Whether you have older parents or are thinking about your own future, you may have considered long-term care insurance (LTCI). In this article, we’ll:
According to the U.S. Bureau of Labor Statistics, 14% of Americans age 15 and older provide unpaid care for an elder 3.9 hours per day (on average). Statistically speaking, that number will continue to rise.
As the Baby Boomer generation continues to age, an increasing number of people will need care. Unfortunately, many of their adult children are still in the workforce.
Some common questions we hear from clients are:
What happens if my parents require in-home care?
What if they need to move into an assisted living facility?
These are very valid concerns. One-third of adults over age 85, and nearly half of adults over 90 need assistance with two or more activities of daily living.
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SOURCE: JPMorgan Guide to Retirement 2026
Finding the right provider or facility (not to mention all the paperwork!) can feel overwhelming. But putting things off will only make the problem more stressful if and when the time comes.
To ensure your loved ones get the care they need without quitting your job or draining your savings, here are a few steps you can take:
#1 Establish power of attorney (POA). If your parents are still healthy, setting up a medical and financial POA is one of the most important things you can do to prepare for the future. A POA allows you (or another trusted family member) to make decisions on behalf of a loved one if they are unable to do so.
Setting up a POA can feel daunting, but without a POA, even simple tasks can turn into legal roadblocks. If you’re already an Assembly client, our team can make the process as simple and easy as possible.
#2 Find out if your employer offers an Employee Assistance Program (EAP) with elder care support. Some programs can connect you with a specialist who can help coordinate care and manage logistics. If you don’t have an employer that offers EAP, a geriatric care manager can help you find private nursing care, coordinate medical appointments and handle insurance paperwork.
#3 If your loved ones aren’t at the point where they need care, it’s still a good idea to research assisted living facilities. Once you’ve identified some top contenders, inquire about waitlists and find out what insurance they accept. Not sure where to start? Medicare has a well-maintained and reputable search tool.
#4 Ask your loved ones if they have a long-term care insurance policy. If they don’t have long-term care insurance (LTCI) and are younger than 70, they may be able to get a plan that covers in-home care in addition to short or long-term stays in skilled nursing facilities.
As loved ones age, it’s natural to wonder, “Who will take care of me, when I’m old?” Purchasing a long-term care insurance policy in your late 50s up until age 65 is the “sweet spot” for most people, balancing cost, risk and benefits. But it’s not right for everyone.
Health is an important factor. Chronic conditions or a serious diagnosis can significantly increase annual premiums or disqualify someone altogether. Consider your family and personal history when deciding whether or not to apply for long-term care insurance.
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SOURCE: AARP
For people with significant retirement savings, it may be better to pay out of pocket for long-term care if and when the time comes. This is also known as “self-insuring.”
Here are some facts and figures to consider:
A 65-year-old has a 70% chance of needing long-term care.
Long-term care insurance may make sense for people who expect to live a long time or wish to preserve an inheritance. For example, a parent who owns stocks that have significantly increased in value should hang on to these assets (versus selling them to pay medical expenses). Stocks get a "stepped-up basis" when passed to another family member through an estate, which can save the family a fortune in taxes.
Medicaid and Medicare will cover in-home nursing under certain circumstances, but it’s worth noting: home healthcare spending increased more than 1100% in the past 25 years (this statistic accounts for both population change and inflation).
There are also tax considerations:
If paying for long-term care insurance you might never use feels like a waste of money, consider a hybrid long-term care policy. A hybrid policy blends elder care insurance with life insurance.
The downside? You can use Health Savings Account (HSA) funds to pay for LTCI premiums, but you can’t use your HSA to pay for life insurance, including hybrid policies.
With so many factors to consider, what’s right for one family may not make financial sense for another. The first step is to run the numbers and decide whether it makes more financial sense to self-insure versus purchasing insurance. Investing a bit of time today can prevent weeks of stressful scrambling later.
If you’re like many members of the sandwich generation, the busyness of everyday life can make planning for the future feel impossible. We can help….
Our caring and experienced financial planners can help you create a plan that’s customized to your family’s unique situation. Give us a call at (415) 541-7774 or contact us online.
Disclaimer:
Assembly Wealth (“Assembly”) is an SEC registered investment adviser; however, this does not imply any level of skill or training and no inference of such should be made. The opinions expressed herein are as of the date of publication and are provided for informational purposes only. Content will not be updated after publication and should not be considered current after the publication date. We provide historical content for transparency purposes only. All opinions are subject to change without notice and due to changes in the market or economic conditions may not necessarily come to pass. Mention of a security should not be considered a recommendation or solicitation to purchase or sell the security, and any securities mentioned may be held by Assembly for client portfolios.
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