Wealthy Americans Aren’t Prepared to Pay for Long Term Care
It’s not just the middle class who is struggling with long term care costs, according to a recent survey.
The 2014 US Trust Insights on Wealth and Worth takes a look at the dynamics of wealthy families and how their wealth impacts their financial planning. The survey interviewed 680 high net worth and ultra high net worth individuals with more than $3 million in investable assets about various financial situations facing them now and in the future. It turns out, middle income Americans aren’t the only ones facing problems when it comes to long term care. 6 in 10 respondents said they have provided substantial financial support to adult members of their immediate and/or extended family.
“While the survey doesn’t specifically say it’s necessarily health-related… we believe it is,” Chris Heilmann, U.S. Trust’s chief fiduciary executive, told CNBC.
Medical Care Poses Risk
Among the top 5 influencers that affect overall family financial well-being, medical crises were listed in the top 3. An estimated 7 in 10 American seniors will need long term care at some point in their lives and a small percentage have planned for the potential costs that lie ahead. One year in a nursing home costs an average of $87,600, according to the most recent Cost of Care Survey put out by Genworth Financial. For most, the costs are simply not manageable, especially on a fixed income. Expenses can quickly add up and take a serious toll on your retirement portfolio.
Despite the serious financial risk posed by long term care, just 38% of high net worth or ultra high net worth married couples have a financial plan to address the cost of long term care for both partners. People might believe they have enough in assets to self-insure, but if you have the funds to self-insure, you have the funds to pay for a policy, which will cost you much less than out of pocket care costs will.
There is always a chance that you will not use your policy, which is why it’s important to not over insure, but even a basic policy addresses one aspect of long term care that self-insuring cannot: inflation. Long Term Care Insurance policies provide the option to include inflation protection, which grows your benefits over time to keep pace with inflation, an advantage that is lost when you decide to self-insure your assets.
Budgeting for Long Term Care
Long Term Care Insurance policies are guaranteed renewable and for those with millions in assets, a good plan can easily fit into a budget. Striking a balance between benefit levels and the affordable rates can help keep the premiums low. Using interest from a savings account is a simple and common way to cover the cost of the policy. Read the full survey here or find out more about how to preserve your assets with Long Term Care Insurance.
We can help guide you through the various options available for long term care coverage and help you on your way to financial security in retirement. We will provide you with a quote comparison of the top Long Term Care Insurance providers for you to review on your own time. Request a free quote today.