Long-Term Care Financial Planning
When it comes to financial planning, people often plan for the best-case scenario and ignore the things that can quickly derail years of planning. As unpleasant as it may seem, engaging in some planning now can ensure that you can get the care you need and protect your family’s future. At Alpha Crypto Consulting, we help people both grow their wealth and protect it, which means planning for long-term care. For those clients who already have long-term care plans in place, we review and optimize their plans to ensure that they are on target.
Why You Need to Plan for Long-Term Care
Despite the fact that so many of us will need long-term care later in life, many of us fail to plan for this possibility. If you fail to plan for long-term care, there are two possible outcomes in the event that you need more care than anticipated:
- You drain your savings, investment accounts, and other options in order to pay for the care that you need; or
- Your long-term care becomes the responsibility of your family and loved ones.
It is also possible that you will expend all your assets and then wind up being cared for by your family. In either scenario, you or your family wind up using the wealth for your care that you had set aside to take care of them.
In addition to the financial ramifications, failing to plan for long-term care can also carry serious real-world consequences. Suddenly having to care for a loved one can be emotionally exhausting in addition to the financial burden. In addition, it can up-end the lives of your loved ones, causing them to leave their own careers, forgo educational opportunities, or simply live a more difficult life than you wanted for them.
What You Need to Consider for Your Future
There are many factors to consider when thinking about long-term care. There is no one-size-fits-all solution. The best long-term care financial planning is a part of an overall plan to grow and protect your wealth. That way, you can make sure you have the ability to adequately cover your long-term care needs without jeopardizing your other financial goals. Here are some factors to consider when thinking about your long-term care needs:
- Your long-term financial needs: do you have children you need to put through college? Are you planning to take care of your own parents in their later years? What can you reasonably expect in terms of your career earnings? In short, you need to consider your potential long-term care needs as one of many competing priorities.
- The cost of long-term care: It is difficult to estimate the cost of long-term care as it will depend largely upon what your needs will be and what type of care you want. That said, some sources estimate the average cost of long-term care to be around $172,000. Rather than focus on this figure, however, you should consider things like in-home care versus care in a residential facility.
- Your options for long-term care planning: There are different strategies and several different products available to help you save for your long-term planning needs. A financial planner can help you decide what makes the most sense for you.
Your Options for Long-Term Care Planning When Working with a Financial Advisor
Understanding your options is the first step to long-term care financial planning. A financial planner with experience in long-term care planning can help you decide which option or options are best for you.
Self-Funded Long-Term Care
You can always choose to fund your own long-term care plan. Generally speaking, this involves setting aside money either in savings or investments funds to be specifically used in your later years to meet your long-term care needs. This is probably the least complicated and accessible option for many people.
That said, many self-funded plans fail when unexpected events occur. A sudden loss of income, an illness in the family, or other financial crises can quickly absorb the money you use to fund your plan. As a result, many people who choose to self-fund their plan face shortfalls in their later years when they need long-term care.
Another potential issue with self-funding is the amount of time and effort it requires to ensure that you are meeting your goals. Many people who manage their own long-term care planning wind up missing opportunities for lower costs or better returns simply because they do not have the time or expertise to make the most of their money.
Long-Term Care Insurance
Another option is to purchase long-term care insurance. Most of these policies work like a traditional insurance product – you determine how much coverage you want and what you can afford to pay in terms of a premium. Once purchased, you have coverage for as long as your premiums are paid. That said, there are other products that may incorporate life insurance coverage or have other features that may be beneficial.
A financial planner can help you choose the right policy for you. Factors they can help you consider are the type and quality that you may want, how much coverage you wish to purchase, and what monthly premiums you can afford. They can also make sure your insurance coverage is consistent with your larger financial goals.
Many people choose to rely upon Medicaid for when they get older. While this is a viable option, it is critical that you understand two things:
- Medicaid is an income-qualified benefit. This means that you may not qualify for coverage if your income is too high or you have significant assets.
- Medicaid has significant limitations when it comes to how much control you have over your benefits and how much coverage it provides.
If you are relying primarily upon Medicaid for your long-term care needs, it may be worth speaking with a financial advisor to discuss other options that may be available to you at an affordable price.
Contact Alpha Crypto Consulting for Your Long-Term Care Financial Planning Needs
At Alpha Crypto, we have built our business on providing fully-customized financial plans to address our clients’ most important needs. No matter what stage you are in life, it is never too late to discuss long-term care financial planning. To discuss your needs and how we can help, reach out to us today to schedule a consultation.