Planning is key to much of our daily living. Whether you’re doing a business plan, vacation plan, or a financial plan, it would be pretty difficult to navigate the unknown without having some direction. Planning for the need for Long Term Care is no different. While we don’t know which direction the cost of home health care will go in the future, the trend over the past few decades has been upward; in other words, it’s gotten more expensive. This could do damage to your life savings.
What are the options for long term care?
- You can self-insure; that is to say, you can fund any future costs incurred directly from your personal assets. This can be an easy decision for an investor with $2 or $3 million or more in liquid assets. If you have less than that, though, you could be gambling with your future income or your heirs’ inheritance.
- You can use government assistance; in this case, you may be required to spend your assets down to poverty level and qualify for Medicaid coverage. The spend-down limits vary from state to state, and keep in mind that it’s illegal to purposely transfer assets out of your estate in order to qualify. But for people with very small estates or those living solely on Social Security, this could very well be their only option.
- You could purchase Long Term Care insurance; by doing so, you transfer the risk to an insurance company and pay an annual premium. You could also pay a ten-year premium, or even a one-time lump sum payment in some instances.
So which is best? Everyone’s situation is different, but often times a combination of self-insuring and purchasing Long Term Care insurance is a good strategy. This can potentially work because many investors are able to absorb some risk; they just are not willing to lose their lifetime savings. It’s best to work with a qualified advisor who can assess your situation and help you to arrive at the right decision.
Check with your financial adviser before you make any decisions regarding how to address your long term care needs. The advisers at Lucia Capital Group can help you with these important choices. Give them a call at 800-644-1150 to see which strategy is best suited for you.
Investment advisor representatives of Lucia Wealth Services, a registered investment advisor, are also registered representatives of, and offer securities through, Lucia Securities, LLC, a registered broker/dealer, member FINRA/SIPC. Lucia Wealth Services and Lucia Securities, LLC are wholly owned subsidiaries of Lucia Capital Group.