“I’m not going to think about it,” they say to themselves on the toss-and-turning nights they spend doing just that. “If I don’t think about it, it won’t happen to me.”
It does happen, though, and more often than they think. People who haven’t planned well do run out of money and, as a result, lose control over some choices they’ve taken for granted such as where to live, what to eat and how to spend their free time.
The average cost of assisted living in Wisconsin is $4,004 per month, and, even if you’ve settled yourself comfortably into an assisted living facility, established great relationships with the staff, made friends and looked forward to the excursions and weekly Tai Chi, you will not be able to stay if you can’t make those payments.
Medicaid does not pay for assisted living. It does pay some costs of nursing home care, but only for those who qualify financially. The average cost of nursing home care in Wisconsin is $8,430 a month, with costs rising an average of 3% annually.
Would your budget withstand an $8,430+ hit each month and, if so, for how long?
In the past, the only choice for people who wanted to protect themselves from skyrocketing nursing home costs was Long Term Care insurance. While these stand-alone policies remain valid options for some, they do not appeal to everyone. Many express concerns about pouring so much money into a policy on which they may never make a claim.
Self- funding is an option, but only for those who can set aside nearly $2 million for that purpose. To generate $101,160 per year at 5% rate of return you would need $2,023,200 in order to maintain principal year after year.
As strong advocates for financial education, we suggest that, rather than avoiding Long Term Care protection altogether, people learn about the many other choices available to them.
Concerned about wasting your money with a traditional Long Term Care policy? Look for a LTC plan with a return of premium rider option included.
Want to insure you or your loved ones will reap some benefits from your policy even if you never need nursing home care? Choose life insurance with a long term care rider, or a lump sum annuity hybrid.
If you want to hear more about ways to avoid outliving your money, call us today.
At Winch Financial, our goal is to shine a light on retirement monsters, look them straight in the eye and banish them for good.