Retirement Planning

Long Term Care Planning

We believe the traditional advice from financial advisors regarding long term care insurance is generally wrong.

A standard recommendation is to buy a traditional long term care policy, which creates another expense that increases in cost as you get older. If you need care in your 60’s or 70’s this could be a viable strategy. The benefit you will receive will normally far exceed the cost you pay.

But if you are healthy, and plan on living into your 80’s and beyond, this could be very expensive, bad advice.

An 87-year old man once came into our office to meet with CEO, Troy Sharpe, after listening to the Retirement Income Show. He slid his policy’s annual premium notice across the table to us. The notice showed he was going to have to pay 100% more this year to keep his policy in force.

He said, “Troy, this is the 3rd year in a row I’ve received a notice that my costs were increasing 100%!  I simply can’t afford to keep this policy in force.”

He had paid for that policy for more than 15 years, had never had a use for it, and ended up unable to pay for the continually rising costs.

At Oak Harvest, because we focus on helping people in retirement, we’ve seen these notices and this kind of situation numerous times. This is why we recommend using strategies that help offset the cost of long term care in the future without creating additional monthly expenses that can increase in cost over time.

Depending on your situation, retirement vision and goals, there are various innovative solutions on the market today that we believe are better solutions.

Our view is that the overall goal with these various strategies is to ensure the money you set aside for long term care in the future does 3 things:

  1. Is an asset, not an expense. This helps provide security that the money you set aside for LTC is growing and available to you in emergencies
  2. Ensures that your money and benefits can pass to your family if you never need care.
  3. Is fully guaranteed against your having to put in more money to maintain coverage.

Long term care costs can be one of the biggest expenses you incur in retirement. According to the U.S. Department of Health and Human Services, approximately 70% of people over the age of 65 will need some type of long term care in their lifetime. Most people agree that having protection makes sense, it just comes down to a simple question:

What is the best way for your family to plan for these future costs?

According to Genworth’s Annual Cost of Care Study, in 2018 here are the following median costs in Texas:

Annual Texas Median Costs 2018

Homemaker Services:1 $48,048
Home Health Aide:1 $50,336
Adult Day Health Care:2 $18,720
Assisted Living Facility:3 $48,000
Semi-Private Room in a Nursing Home:4 $89,297
Private Room in a Nursing Home:4 $100,375
Genworth 2018 Cost of Care Survey, conducted by CareScout®, June 2018
1 Based on 44 hours per week by 52 weeks
2 Based on 5 days per week by 52 weeks
3 Based on 12 months of care, private, one bedroom
4 Based on 365 days of care

The main purpose of any long term care plan should be to offset the burden of large expenses and reduce the need to withdraw from the portfolio to pay for care. At the same time, you may want to make sure a surviving spouse is positioned to have enough money to never run out of income and be able to finance their own care situation without being a burden to children.

As part of the Oak Harvest Path, if long term care planning is important to you, we will educate you on the various asset-based strategies that accomplish the 3 primary points we believe today’s long term care strategies should meet:

  1. Is an asset, not an expense. This helps provide security that the money you set aside for LTC is growing and available to you in emergencies
  2. Ensures that your money and benefits can pass to your family if you never need care.
  3. Is fully guaranteed against your having to put in more money to maintain coverage.

As part of building a Customized Retirement Plan, our “Retirement Dream Team” will work with you to determine how long term care strategies may be utilized to help protect your wealth, family and legacy.

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