A PSA for Your Future · 5:19pm Jan 12th, 2022
This is directly related to my previous blog post from last night, so if you haven't seen that, please give it a quick look, then come back here.
*hold music ensues*
So one thing I didn't focus on much in the previous post was the nature of the new living arrangements my folks are transitioning to. It's what's commonly called "assisted living". Basically there's a professional staff (medical and non-medical) who provide whatever level of assistance a resident might need. Everything from ensuring they get their meds on schedule to bathing and dressing. It's a sliding scale, and you can turn it up or down as your needs change. Obviously their 'need level' will be pretty low right now, as dad is well enough to do most of it himself. But that will of course change with time, and being in this new setup allows dad to turn that assistance dial as his (and more importantly mom's) needs change.
But beside that, it'll be a nice and relatively spacious 2B 1B apartment. Washer/Dryer included, secure garage parking, lots of activity clubs. Great location and after meeting with them myself, a great staff.
As you can imagine, this won't come cheap. Senior care - especially for long term issues like Alzheimers - is NEVER cheap. Given the economic generation my folks grew up with, they've done pretty well for themselves over time. But a big chunk of the cost for this is going to be offset by the Long Term Care Insurance (LTC) that they signed up for years ago.
And that's what I want to give you all a PSA about.
LTC is pretty much what it says on the tin. It's a policy that pays out a monthly benefit to you to cover qualified expenses incurred as a result of needing long term care. That could mean assisted living, a full-on nursing home, in-home nursing care, etc. It's not just for seniors either. An accident or sudden health condition that leaves you homebound or in need of constant care? A LTC policy can offset that too.
These policies normally run for 3-5 years once benefits are activated, or until the fund pool is used up. So it's not endless. But setup properly, they can make a huge difference in the level of service/comfort you can get for yourself should you need it.
My parents were inspired to sign up for a LTC after seeing the logistical/financial mess the family through caring for my grandma all those years. And that trickled down to me, as my wife and I recently signed up for a policy as well. We pay a premium like any other insurance policy, but if we ever need it, it'll be there.
So my overall point here is to encourage everyone to consider LTC plans at some point. The younger you are when you sign up the cheaper they will be. Buying on the open market, prices can be very high, but if you can get in under a group rate (like AAA, or some other organization), it's a lot easier to buy in. Some normal Life Insurance plans also offer a "LTC rider" that tacks on some LTC benefit to the normal policy.
Just something I'd like everyone to think about. Thanks.
It'll be some time before my folks need LTC but it's worth looking into
I looked into "LTC" but honestly for the money they want to get into it (and the state I live in trying to FORCE us to have to pay into it thankfully we are fighting that in the courts). I can invest that money in long term stable bonds, and make more money with higher payback per dollar invested.
I can see it being useful for people who didn't plan out a proper retirement (boomer generation), but for anyone of Gen X and younger, the money is better spent on investments.
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I think it's reasonable to expect an average portfolio to have a higher ROI than most any kind of insurance product. Of course no one knows how the market will perform in the future, nor is everyone going to be able to invest consistently enough (and at sufficient levels) to get that ROI. To be fair, standalone LTC may not be ideal for everyone in all cases. In fact, for a younger person in their 20s, I'd first look for a Life policy that has a LTC rider attached. Those give you some coverage on both aspects, and will always cost less than a full LTC-only setup. (and really, Life ins is a good thing to have anyway)
As for WA state: My POV is a bit biased here, but I can appreciate the motivation behind their LTC setup. If funded adequately, I do believe it would relieve the state of some fiscal pain, since currently they're expending state-level funds to try to provide LTC-ish services to people who really would benefit from more serious dedicated care but can't afford it. Obviously, in order to fund that system to an ideal level they'd have to set the payroll tax far higher than it is currently. So the max benefit per person should they need it won't be awesome. But far better than nothing too. (transparency: in our case my employer partnered with a LTC provider to offer us a group rate buy-in, which made our decision a lot easier)
Insurance? In this economy?
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I agree, today's probably not the best time to go get much of any large expense unless it's totally necessary. I meant all of that in the sense of 'here's some additional context to my previous blog and LTC's something worth considering at some point'.
But to your point, anything like that is easier to consider when the world's not upside down.
I’ve been going to look into LTC but as you mentioned, it’s rather expensive to purchase. That said, in the next year or so, I’ll be finding a plan to get into. Relying on family to provide any care if I become disabled isn’t an option for me and I’d much rather have some certainty in care and lifestyle when I reach that point in my life.