At a moment in life where people may need ongoing care and ongoing help, everyone deserves to feel safe and secure about how they'll afford it.
I have a client, Cindy, who's in her mid-80s and single and lives alone. Cindy lives in a continuing care retirement community. She lives off of her portfolio and her social security benefits.
During a meeting, the markets were pretty volatile, and Cindy was nervous and upset. So at the beginning of our conversation, we were just talking about what was causing the volatility in the markets and how the state of our economy was. I started then asking questions that had nothing to do about the markets at all.
Cindy was concerned that if the markets were down, she wouldn't be able to afford to live in the retirement community. She's made great friends. The staff is really friendly. And she really enjoys the care that she receives. Her concern was, how would I afford this care if the markets don't cooperate?
Our research shows that only about half of retirees end up needing long-term care. But if you do, the cost can range from $60,000 to over $300,000 in your lifetime. If you think you might need long-term care down the road, you may want to consider insurance. So just like car insurance, you would pay a premium each year. And just keep in mind, the provider may increase your premiums. You want to make sure you'll be able to afford both.
Another type of insurance is considered a hybrid policy, where you're taking two separate insurances and marrying them together-- long-term care and life insurance. With life insurance, you have a death benefit and a beneficiary. Upon your passing, your beneficiary gets a lump sum of money.
With long-term care, there's a pot of money available for your care later on in life, if you need it. If you don't need it, upon your passing, your beneficiary will get that lump sum of money.
Then there's self-insurance, the path that my client, Cindy, took, where she's relying on her portfolio to cover any out-of-pocket expenses. So the first step we'll have you go through is our health care estimator tool. We'll get a sense for what your expenses can be.
Next, will put them into your expense worksheet and then stress test your portfolio. We want to make sure you're able to maintain your lifestyle. If your assets are below a certain level, you'll be eligible for Medicaid, a government health insurance program that does cover long-term care for low-income Americans.
As an advisor, I can help you work through all this, just like I did with my client, Cindy. We threw in some what-if scenarios, stress tested her portfolio under various market outcomes, and concluded that Cindy could receive the care that she wanted regardless of the market outcome. As an advisor, hearing the relief in Cindy understand why her lifestyle didn't have to change is why I love my job.
