5 Expensive Long-Term Care Planning Mistakes to Avoid
The vast majority of Americans need long-term care. According to the U.S. Department of Health and Human Services, 70% of people over age 65 may need some long-term care during their lives.1 Unfortunately, planning for long-term care may be confusing. To safeguard your finances, try to avoid these expensive mistakes.
1. Don’t Assume You Don’t Need Long-term Care
It’s impossible to tell if you will be among most people needing long-term care. Family history and how you care for your health may give some insights into your risk factors, but ultimately, you cannot predict the future.
All kinds of people who expect to live long and healthy lives ultimately need some long-term care. If you do not make a plan, you may end up paying more in the long run.
2. Don’t Rely Exclusively on Medicare
While Medicare provides much-needed support to people during their retirement, it does not cover long-term care. If you do not have the resources to pay for long-term care on your own or through an insurance plan, you may need to use Medicaid.
Because Medicaid is a needs-based program, you must liquidate or transfer your assets to qualify.2 If not handled correctly, you may incur penalties. In most cases, you effectively lose the ability to bequeath anything of significant value to your heirs.
3. Don’t Lean Too Heavily on Family
Some lean on family during tough times, but regardless of how much your family loves and cares for you, they cannot be the support for your long-term care plan.
To give you an example, imagine that someone plans to rely on their adult children if they need long-term care. This strategy sounds great in theory, but it does not consider all factors that may affect someone’s ability to care for their parents. They may have issues with their children, financial struggles, or health problems. They may have to move for their career or help their spouse’s family.
In some cases, they may even predecease their parents. Although you may create a long-term care plan that includes your children, you must also create a safety net in case that becomes impossible.
4. Don’t Forget to Plan for Long-Term Care
If you are like most people, you understand the importance of having a retirement plan. You may already have a plan that safeguards your income levels after retirement. You may look forward to a “third act” for a retirement filled with hobbies and vacations. At the same time, you may have acknowledged your death and have an estate plan, a living trust, and a will.
However, you must realize that these are not the only elements you need to consider. While you may hope for a long and healthy retirement, you must also ensure that you prepare for potential health concerns. If you don’t plan for your long-term care needs, the costs may erode the wealth you want to pass on to your heirs. In other words, if you get ill and do not have a long-term care plan, this circumstance may destroy your estate plan.
5. Don’t Overlook Getting Advice from a Financial Professional
A financial professional might be able to answer your questions about long-term care. This consultation may help you avoid expensive mistakes. Talking with a financial professional may give you the confidence necessary to make a long-term care plan which makes sense for your circumstances.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
LPL Tracking #1-05325555.
Footnotes
1 What Is the Lifetime Risk of Needing and Receiving Long-Term Services and Supports?, Office of the Assistant Secretary for Planning and Evaluation,
https://aspe.hhs.gov/reports/what-lifetime-risk-needing-receiving-long-term-services-supports-0
2 How Can I Safely Transfer My Assets to Get Medicaid to Pay for Long-Term Care?, NOLO,
https://www.nolo.com/legal-encyclopedia/how-can-i-safely-transfer-my-assets-get-medicaid-pay-long-term-care.html
