Creating a plan for care when you need it the most
You’ve made some great strides toward meeting your short- and long-term financial goals and priorities. Some of the steps you’re taking may include:
- Saving for retirement.
- Managing your debt strategically.
- Ensuring your family’s finances are protected with life insurance and disability income insurance.
- Planning ahead with your savings, including your emergency fund.
- Getting your will and advance directives in place.
- Reviewing and positioning your assets to be more income tax-efficient.
However, there may be one more to-do for you. It’s your long-term care plan, also known as extended care. It’s the strategy you’ve put into place that can help your family make decisions about your care needs down the road, either at home or in a facility, if you were to become disabled or severely ill.
Perhaps you think you don’t need to consider that yet. But whether you’re 45 or 75, an extended care plan should be part of your consideration when it comes to planning for potential expenses. You’re not alone if you haven’t thought about it. About 70% of Americans who responded to
“No one wants to think about needing assistance or being unable to care for themselves, at any age,” says Steve Sperka, vice president of health insurance products at Thrivent.* “We don’t want to picture ourselves with a health condition or cognitive impairment. We want to picture ourselves healthy and independent up to the moment we die.” But that’s not the reality for many.
So, where do you start? Consider the following five questions as you make decisions about your long-term care strategy.
Why do you need a long-term care strategy?
Perhaps you’ve watched a family member or friend provide care for someone they love. It may have been an elderly parent, a sibling or a friend. While the need for care is often the gradual consequence of aging, sometimes
What did you notice about how the care giving effort affected those providing it? How did it impact their lifestyle? How were the costs managed? Oftentimes in these scenarios, caregivers take a leave from work to help. While they want to do it, there may be some challenges with balancing what they can give and their own needs. “Caregivers can get worn out financially, emotionally and physically,” Sperka says.*
You also may hear stories of families that splintered when kids disagreed over how care should be provided for mom or dad, or how the costs should be paid. “These are the things people don’t plan for, the situations that reinforce why you need an extended care plan,” he says. “Ultimately, no parent really wants to see a care event cause a family to break apart.”*
What does a long-term care plan include?
Your plan should give your family clarity on what you want to happen if you’d need long-term care, Sperka says.* And it should be done as part of your comprehensive financial strategy. “At the most basic level, in the event you get to a place where you can’t care for yourself, your family should know who the primary decision makers are, how you want them involved in your care and where you want to live,” he says. “You also want them to know where there are dollars to make your wishes reality, whether in savings, other investments or in a long-term care insurance contract.”
Tracy Berglund, Thrivent financial consultant in Hudson, Wisconsin, equates a long-term care plan to risk mitigation. It’s preparing for an unknown crisis and having a way to lessen the potential negative impact, she says. It should be a written plan, so if you develop a cognitive impairment, there are no questions about what you want. And it also should include a conversation with those who would need to execute the plan long before it’s actually needed.
“There’s a lot of stress and strain on families today even without a health crisis,” Berglund says.* “Putting a plan into place ultimately isn’t for yourself; it’s for your family as an act of love for them.”
Putting a plan into place ultimately isn’t for yourself; it’s for your family as an act of love for them.
Who do you want providing long-term care for you and where?
These are critical questions, says Kristi Noel, Thrivent financial associate in Fosston, Minnesota, and usually the first assumption is that your family will take care of you at home.
“Oftentimes loved ones can’t say no because they love their family,” Noel says.* “Women, especially, are natural caregivers. They’re going to care for people until the day they can’t stand up themselves. But depending on your condition, do you really want to put your care entirely on the shoulders of those you love most?”
Your spouse may not be physically or emotionally able to provide for all your needs. You may not be comfortable with your adult children helping you with things like bathing, dressing and eating. Also consider:
- Do you plan to always stay in your current home, or do you plan to move some day, perhaps when you retire?
- If you think you’re going to move, will you stay in your current area or retire to a different climate?
- And if you stay in your current home, would modifications be possible if needed?
“These are all important questions to consider,” Sperka says. “Different parts of the country have different opportunities for care, and you’ll have to take the cost of living into account.”
A little research can help you find out what options exist in your area for licensed home care providers or adult day care, a place where you’d spend the day while your loved one is at work. It’s good to understand the costs of those options, Noel says, and then begin to look at how you will pay for them.
“You have the power when you’re healthy to create the extended care picture you want, and while there are costs associated with care, having a plan for handling it is priceless for you and your family,” Noel says.*
How will you pay for your long-term care?
The cost of care may be even more than you'd expect. The average cost in facility care in New Jersey, for example, is estimated at $155,890 a year, according to the
Thrivent’s Extended Care Planning survey found that 75% of those who responded said it would be difficult to pay for long-term care, and 52% revealed they wouldn’t be able to fund their care if they needed it today.1
You may choose to save specifically for future health care costs or earmark investments to be used for long-term care. Sometimes government programs like Medicare can help, but it isn’t intended to take care of you in the long term. Another option to consider is a long-term care insurance contract to help cover expenses. It can help cover home care, assisted living/residential care, adult day care, nursing home care, and in some cases, even training and support to help you remain in your home. It also may help pay for home modifications.
“When people hear long-term care insurance, they immediately think of it as nursing home insurance,” Berglund says. “In reality, many people use it for home health care. It’s important to understand that it provides so much more.”* It’s about the services that are provided, not necessarily the place.
Also, a long-term care insurance contract is not a one-size-fits-all contract, Berglund says. There are different costs for different features, and your financial advisor will work with you to find something you can afford and that will meet your needs.
“It’s meant to work with your assets,” she says.* “We’ll look at your budget and find the best options for you.”
Why plan for long-term care now?
There’s no magic age, but when you seriously start looking ahead to retirement, an extended care plan, including long-term care insurance, should become part of your financial strategy. For some that’s in their 40s; for others, it’s in their 50s or 60s.
“The risk of waiting is your insurability,” Berglund says. “Will you be insurable when you finally decide you want it, or will you be declined because of a health issue?” Plus, premiums may be lower if you buy when you’re younger.
Earl Monson of Stillwater, Minnesota, and his late wife, Marjorie, didn’t want the burden of care to fall on the other if something should happen, so they planned ahead for extended care. They bought their long-term care insurance contract, Monson says*, because “it made sense.” When his wife started showing signs of Alzheimer’s and couldn’t stay alone, Earl, who was a large-animal veterinarian, would take her along on calls. But the day came when she needed more care than he could give. She moved first to assisted living, then a nursing home. Per the long-term care contract Marjorie had purchased, it helped pay the expenses for three of the more than four and a half years she was in care.
“With room and board and other expenses, it would have cost us $278,000 if we didn’t have insurance,” says Monson, a Thrivent client with membership. “I would have gone broke. I probably would have had to sell our home.” It’s been seven years since she died, and Monson has continued his long-term care coverage. “You don’t know how long you’re going to live or what you’re going to need,” he says.3
5 things to consider before purchasing long-term care insurance
You can tailor a long-term care insurance contract to fit your budget and goals. Here are five
1. How much coverage do you want?
2. How long do you want benefits to last?
3. How long is the waiting period before coverage kicks in?
4. Do you want your benefits to grow over time?
5. How much do you want to pay in premiums?
Learn more about creating a long-term care plan by talking to your