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Thursday, August 9, 2018

What will your final years cost and how to pay for them

For every year we live, we can expect to pay the price for gaining wisdom. And while age brings many benefits, one of the disadvantages is that bills continue to show up in the mailbox even when our income ceases to flow. Here are a few things to consider when planning for your own long-term care needs.

What will I need?

Your needs will largely be determined by your health and physical abilities. If you are healthy and have the option to remain in your own home, your needs will be minimal. If you own your home outright, you won’t have to worry about a mortgage. But you’ll need to cover utilities, food, medical care, insurance, transportation and entertainment. You’ll also (unfortunately) need to plan for funeral costs, which can be steep.

If your health is less-than ideal or you have a family history of cognitive decline, aging in place may be dangerous and your planning should provide for the added expenses associated with long-term care. This will include housing, medical assistance and help with Activities of Daily Living, which Medicare.org describes as eating, dressing and hygiene care. Other advanced care needs may include assistance with household chores, cooking, transportation and safety monitoring.

Regardless of your health, you’ll also need to consider the condition and functionality of your current home. A single-story home with few falling risk is ideal. Your location and lifestyle choices, such as if you like to travel or need to be in close proximity to recreational opportunities, family or other amenities should further factor into your planning.

How will I afford long-term care?

Unfortunately, Medicare doesn’t cover all every long-term care situation and how you plan now can have a huge impact on your future. There are steps, however, that you can take to circumvent a personal disaster should you require advance care.

CareConversations.org asserts that your first action should be to  get educated when it comes to your options. Paying for long-term care expenses may become a burden if you don’t take preemptive measures. Long-term care insurance is an option and one that won’t put a huge dent in your budget if acquired at a relatively early age.

Assets and savings

Social Security is typically not enough to cover monthly living expenses beyond retirement. If you are like most people, you will have to rely on a combination of Social Security, savings, and asset liquidation. If you own your home outright, a reverse mortgage product is an option to pay for long-term care. The Federal Trade Commission explains that a reverse mortgage will allow you to stay in your home while converting a portion of the equity built into funds you can use for your specific purposes. However, this will reduce your heir’s inheritance.

You can circumvent a great deal of headache for your family by taking care of funeral costs while you’re still alive. Lincoln Heritage Funeral Advantage explains that the average funeral cost in the United States is more than $8,500 – adding a gravestone, obituary and end-of-life celebration can more than double this expense. Options for pre-paying your funeral expenses include creating a joint bank account, purchasing a pre-need plan from a local funeral home, or establish a Totten Trust, also known as a POD account, through your banking institution.

The amount of money you need to cover your long-term care costs is largely dependent upon your current living standards, your future plans and health. And despite popular belief, $1 million may not be enough as we continue to live longer and enjoy better health. Regardless of your needs, if you take the time to plan now, you can avoid confusion (and financial ruin) for yourself and your loved ones when the time comes.

About the author: uno is the co-creator of Rise Up for Caregivers, which offers support for 

family members and friends who have taken on the responsibility of caring for their loved

ones. She is author of the upcoming book, The Complete Guide to Caregiving: A Daily 

Companion for New Senior Caregivers.

Image via Pixabay