No matter how healthy you are right now, or “plan” to be later on in life, it’s essential for you to protect your retirement savings from potential Long-Term Care (LTC) and other health-related expenses. Without a solid plan in place that addresses the potential expenses associated with LTC and health risks, your savings could be at risk. So today, let’s talk Long-Term Care planning and go over some of the reasons why it should play an important role in your overall retirement strategy.
The “it will never happen to me” mentality plagues many people, and it does not fare well when an LTC event arises as it can rapidly drain your savings. Without proper preparation for health events, especially LTC events, people may be forced to liquidate assets they never wanted or planned to liquidate. Ultimately, the stress and burden from an LTC-related event is seemingly unnecessary when there are so many ways to help hedge against the risk.
Long-Term Care is simply a range of services that you may need in order to meet your personal care needs. LTC services are generally provided by an assisted-living facility, at home with the aid of a caregiver, or at a nursing home. The cost for LTC varies depending on the type and duration of care you need, the provider you use, and where you live.
Most LTC revolves around assisting people with the basic personal tasks of everyday life. There are six Activities of Daily Living (ADLs): bathing; dressing; using the toilet; transferring to/from bed or chair; caring for incontinence; and eating. Generally, the inability to perform two or more ADLs is a trigger to begin receiving LTC benefits. Other LTC services and support are assistance with everyday tasks. There are eight Instrumental Activities of Daily Living (IADLs): housework; managing money; taking medication; preparing and cleaning up after meals; shopping for groceries or clothes; using the telephone or other communication devices; caring for pets; and responding to emergency alerts such as fire alarms, that again, if you cannot perform alone, you may need some sort of LTC.
In the end, it’s crucial to plan for what can go wrong before being able to afford the luxury of what can go right. This is not a one size fits all type of deal, so be sure that you fully understand the benefits and potential risks associated with each available option. Request your complimentary, no-obligation financial review. Don’t wait until you’re in your 60s or 70s to purchase LTC insurance because if your health deteriorates, you can end up paying significantly more up-front, and in your monthly premiums. It’s very unlikely that you’re going to be in perfect health forever. So, prepare for it now, and it will be a lot easier when you actually do need it, for yourselves and for your families.
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Fixed index annuities are designed to meet long-term needs for retirement income. Early withdrawals may result in loss of principal and credited interest due to surrender charges. Distributions may be subject to ordinary income tax and, if taken prior to age 59 ½, an additional 10% federal tax. An income rider or benefit (sometimes called Guaranteed Lifetime Withdrawal Benefits, or GLWB) is an additional feature available with some annuities and generally optional and come with additional cost. Income benefits are designed to provide income options above and beyond the standard annuitization or free withdrawal features in annuities. All contract gains beyond the CAP rate are surrendered to the insurance company to pay for the expense of the product.
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