Are you prepared for long-term care? It’s time to start planning

BY SHELLEY FORD

As we head into the end of the year and spend time with family for the holidays, it’s a good opportunity to have discussions about long-term care planning.

Even though many of us have spent years carefully planning for a comfortable retirement, there are uncontrollable and often unpredictable variables at play, such as the rising cost of healthcare and the potential for you or your spouse to require long-term care.

Long-term care is comprised of a variety of services to address both the medical and nonmedical needs of individuals with chronic illnesses or disabilities who cannot care for themselves for long periods or who require assistance with daily activities, such as eating, bathing, dressing or moving from a bed to a chair. It also includes the supervision of individuals with severe cognitive impairments, such as Alzheimer’s or mental illnesses that limit a person’s ability to think or reason.

As millions of baby boomers age, we are facing a serious crisis. Most Americans will at some point need long-term care, but few are planning for it. According to estimates from the U.S. government, 70 percent of individuals aged 65 today will need some form of long-term care during their lives.

Many individuals don’t realize that health insurance may not be able to cover all of it, and the cost is often underestimated. Long-term care services provided in your own home, at a community facility, or in a nursing home may or may not be covered by Medicare or other medical plans and may significantly impact you and your family’s financial situation.

It’s important to get a realistic picture of what it may cost. Long-term care costs are soaring and can easily deplete retirement savings. According to a 2017 Bipartisan Policy Center report, a 65-year-old today can expect to incur $138,000 in long-term care costs over their lifetime.

While it’s hard to anticipate the unexpected, it is important to consider ways to prepare. Purchasing long-term care insurance can help mitigate risk and protect your retirement portfolio. By paying an annual premium, you can transfer some of the financial risk of long-term care to an insurance company. In addition, think about how to incorporate long-term care savings into your budget. Work with a financial professional to map out your savings goal and how to break that down incrementally into your budget.

With some thoughtful preparation, you can help protect your nest egg against the potential risk of long-term care expenses, enabling you to enjoy the retirement you have dreamed of.

Shelley Ford is a financial advisor with the Global Wealth Management Division of Morgan Stanley in Denver. Morgan Stanley Smith Barney LLC and its financial advisors do not provide tax or legal advice. Individuals should seek advice based on their particular circumstances from an independent tax advisor