Longevity Planning is important. Proper longevity planning will allow you to maintain a high quality of life in your retirement years, avoid the dreaded nursing home, maintain and protect your assets and avoid being a burden on your family members. Not planning can be catastrophic.
Let’s be realistic. Right now, and for the next decade, Baby Boomers are retiring at the rate of 10,000 per day!! At the same time people are living longer than ever before. Many individuals are living well into their 80s and 90s. Recent studies show that one in four people over age 65 will need long term care; and, one out of every two people over age 85 will need long term care.
Uncovered medical bills, basically long term care costs, are probably the greatest threat to your retirement, quality of life and your assets. Medicare and other health insurance coverages generally protect you from expensive hospital and doctor bills. However, this insurance coverage does not help with long term care costs.
Whether you need help at home, in an assisted living environment, in an adult family home or nursing home, those costs are not generally covered by insurance. These costs are severe. In home care costs can range between $20,000 to $50,000 per year; an adult family home can run between $50,000 to $100,000 and skilled nursing care often exceeds $100,000 per year.
Sadly that’s just the cost of a room, care and meals. The cost of hearing aids, walkers, hairstyling, clothes, trips, etc. are all on top of those costs.
How do you address these costs?
It is best to work with a qualified Elder Law attorney. An attorney that merely drafts basic Wills and Powers of Attorney is not sufficient. Why? This area of discipline is extremely complex and requires a thorough understanding of Medicare, Medicaid, Veteran’s Benefits, Wills, trusts, and fiduciary duties. Additionally, the attorney must have an understanding of investments, investment products, how they function, and how those products affect your overall situation. This includes an understanding of IRAs, Roth IRAs, annuities, real estate, business investments, 401K and 403B accounts, reverse mortgages, and more.
If that is not enough, a good attorney can also help with your living arrangements. For many, remaining in your own home is the best option. However, if your residence is multiple stories, has steps to get into the house, has narrow hallways, has the washer and dryer in the basement, etc., the home may no longer be the best location unless modifications are made.
It is also important the attorney have an understanding of how your physical and cognitive health impacts your situation. Issues such as how much and what level of care is or may be needed have to be addressed. A knowledge of how benefit providers interpret medical assessments is important as well as coordinating the resources available to you to challenge an incorrect assessment.
And, if all that is not enough your attorney needs to understand the tax implications of, among other things, setting up trusts, making gifts, selling assets, cashing in various accounts, and deductions for out of pocket medical expenses.
With all these obstacles to navigate you can see why you should not try to navigate all these obstacles on your own. Nor should you rely solely on an attorney who just does “estate planning”; you cannot rely solely on your financial advisor; you cannot rely solely on your medical professionals or hospital social workers; and you cannot rely solely on residential placement agencies that get paid from a nursing facility or adult family home only when you become a resident.
When should you begin this planning?
There is no right or wrong age to undertake longevity planning. However, for most people age 60 or above longevity planning is critical. Additionally, there are vastly more planning options available for married couples than for single individuals. And, what are you after your spouse dies? Single.
Who will benefit from this type of planning?
Generally everyone can benefit from longevity planning. However, the most affluent among us probably need this planning the least. While we all have different views about who is “affluent”, I would say any person or couple with a “taxable” estate in Washington, which is $2,054,000 or more in assets, meets this criteria.
For everyone else, longevity planning is important. And for those with estates of less than $1,000,000, including your house and other resources, this planning is critical.
What will I accomplish with longevity planning?
First and foremost, you will enable yourself to enjoy the highest possible quality of life available In retirement. You may be able to avoid institutional care, otherwise known as nursing home care. You can avoid becoming a burden on your children and other loved ones. You will be able to structure your assets and income to maximize your resources to accomplish a comfortable, quality retirement. And, you will be able to protect your assets and income to provide for you and your loved ones.
So how much will all this cost?
That is different for everyone because everyone’s situation is different. You should be prepared to make an investment of several thousand dollars. However, you can be reasonably certain planning will cost a lot less than one year of even the most affordable care.
Contact us to today to see how we can help you. Hugg & Associates, PLLC