We talk a lot about long-term healthcare insurance being a vital part of any Estate Plan but the truth is 70% of elders still rely on their family to provide it. We found a story that reports there will soon be far fewer people to turn to for these services.
According to a new AARP Study, the ratio of potential family caregivers to high-risk people in their 80s will decline in the coming years: from 7 to 1 in 2010 down to 4 to 1 in 2030 to just 3 to 1 in 2050. These changing family caregiver dynamics stress the importance of adding a long-term care provision into your retirement plan.
“There is a silver tsunami coming; 10,000 people are turning 65 every day, a phenomenon that will happen for the next 16 years,” says Deb Newman a spokesperson of one of the largest insurance agencies in the country. “This tidal wave of Baby Boomers will someday need long-term care. Unless people begin planning, families will be overwhelmed by the flood of caregiving responsibilities.”
Most Americans are unprepared for the coming tide. One reason is many don’t think they will need these services but in reality, 70% of people over 65 will need long-term care.
When it comes to making a plan, here are a few helpful tips:
1. Government Programs – Understand programs like Veterans Benefits and the Administration on Aging services. Educate yourself on the limitations of Medicare’s long-term care coverage as well as the asset requirements to qualify for Medicaid.
2. Long-term Care Insurance – Do your homework. It can provide comprehensive coverage or just cover a portion of your expenses but it might be too expensive, not available or not right for you.
3. Hybrid or “Linked-Benefit” Products – Another option is combining long-term care insurance with an annuity or other life insurance products. The upside is it covers multiple risks through one product and can alleviate the “use it or lose it” concern many have with long-term care insurance. And if you don’t end up needing long-term care, some of the premium can go to fund another benefit, in either annuity payments or a death benefit. The downside is it has a higher buy-in than long-term care insurance.
4. Self-funding – This is everyone’s default option but it’s best when used in conjunction with another approach. “If you have no other plan, you’re electing to self-fund,” says Newman. “But you might not be doing it in the most efficient way.”
Long-term care is not an easy discussion to have but with the decreasing availability of family caregivers, it is crucial individuals plan for it.
Read the story here.