Most people who reach retirement age have, to one degree or another, planned and saved for their retirement.   They are prepared for the challenge of a rainy day, and perhaps even a rainy season.   But few people can withstand a financial monsoon that may hammer them relentlessly for years.

For most retirees, the biggest threat to their ability to leave a financial legacy for their loved ones is the prospect of paying for long-term care.   In the St. Louis area, the cost of nursing home care already averages $4,000 to $6,000 per month … and in many cases more.  

What’s worse, the cost of long-term care has, like the cost of health care, risen over the years at a much faster pace than the rate of savings or general inflation.  Annual cost increases have often exceeded 10% in the past decade, and there are many reasons to expect that trend to continue.  

It’s really easy to underestimate the impact of rising costs over time.  For example, let’s say that you’re 70 years old now.  Let’s assume that the nursing home you would most likely choose if you need that level of care costs $5,000 per month now.  If that cost increases at an annual rate of 8%, here’s how much a stay in that nursing home starting at age 80 figures to cost:

• For a three-year nursing home stay, around $420,000;
• For a five-year nursing home stay, around $760,000.

Kind of makes your head spin, doesn’t it?  If you’re a little bit younger now … say you’re 65 … the projections are even scarier.  For you, that three-year nursing home stay at age 80 figures to cost about $618,000; the five-year stay will set you back around $1,117,000.

Unless, of course, you don’t have that much money to start with.  In that case, you will suffer what’s already the single most common financial outcome when someone enters a nursing home – you’ll start out paying out-of-pocket, but then end up flat broke and on Medicaid.  If you do, you’ll join the long list of people who, ten or fifteen years ago, couldn’t imagine that they would ever need nursing home care, and never dreamed that it could possibly cost as much as it does.

In case you’re thinking that the cost projections shown above must be “trumped-up” figures presented just to throw an unnecessary scare into you, and that nursing home costs can’t possibly rise that fast or that far, then you should consider what has already happened in other parts of the country.  In several states in the Northeast, the average cost of nursing home care already exceeds $10,000 per month.   For better or for worse, trends that start “on the coast” tend to eventually make their way to the Midwest.   Imagine trying to squeeze an “extra” $10,000 out of your monthly budget!   

In case you’re thinking, “I’m not going to worry about it, because I’ve told my family not to ever put me in a nursing home,” think again.   Studies have consistently indicated that if you make it to age 65, there is about a 45% chance that you will sooner or later need long-term care.   And trust that the statistics reflect the experiences of people like you, not aliens from another planet.   Nobody wants or plans to go into a nursing home.   But the fact of the matter is that, sad but true, many of us will eventually needthat level of care.

If you’re young enough, in relatively good health and can afford it, investing in long-term care insurance can be a good idea.   But that option is not available to everyone.   You (or, if you are married, one or the other of you) may not be insurable, or financial realities may limit the amount or term of the coverage you can afford to purchase.  If you are considering the purchase of long-term care insurance, we can offer specific and practical suggestions that will enable you to maximize the cost-effectiveness of the coverage you purchase, and we can supplement that form of risk management with legal planning known as asset preservation planning.  It’s a safe and legally effective way of guaranteeing that the cost of long-term care will not exhaust your life savings.

If you can’t qualify for or afford long-term care insurance, then having an asset preservation plan in place will probably be the only thing that stands between you and potential financial devastation if you (or your spouse, if you’re married) later need long-term nursing care.  If you don’t have an asset preservation plan at place, you’re at substantial risk of losing everything you worked and saved for your entire life.  That sounds harsh, but reality sometimes is.

The good news is that asset preservation planning works extremely well, and it’s perfectly legal.  For example, the 65-year-old or 70-year-old who, as shown above, would might otherwise wind up flat broke as the result of a nursing home stay starting at age 80 could, through wise planning, protect virtually all of their life savings from that risk.  What’s more, that can be accomplished in a way such that the assets that have been protected can still be accessed if and when the need for them would arise.
Asset preservation planning is probably the wisest investment an older person can make.  Every dollar spent on planning can end up producing twenty, fifty, or even one hundred dollars or more of savings.

If you see yourself as someone who ought to consider asset preservation planning, call or e-mail us today, and we’ll be happy to tell you more about it, including how easy it is to get started.  If you know of someone else whom you think would benefit from this planning (most people age 65 or above with much by way of life savings definitely would), call or e-mail us and we’ll show you how easy it will be for you to refer them to us for information and help.