Retirement Coverage and Peace of Mind     

By Terri Hughes-Lazzell

Planning for retirement doesn’t only mean ensuring enough money to enjoy oneself. It also includes planning for the unexpected, such as an illness or injury that requires long-term care.

The cost of long-term care insurance can be a burden if not included as part of a retirement plan, says Brent Sines of Postema Insurance & Investments LLC, and is something that needs to be considered and reviewed.

According to the U.S. Department of Health and Human Services, some of the average costs for long-term care in the U.S. in 2010 were:

• $205 per day or $6,235 per month for a semi-private room in a nursing home

• $229 per day or $6,965 per month for a private room in a nursing home

• $3,293 per month for care in an assisted living facility (for a one-bedroom unit)

• $21 per hour for a home health aide

Those costs add up quickly, so ensuring that one’s retirement funds aren’t eaten up by those costs is crucial, Sines says. But, he concedes, long-term care insurance also can be expensive, and if one doesn’t use it, then it is money not well spent. The answer may be in what is termed as a long-term care hybrid.

These options help seniors to protect themselves and their assets by using tools that are already a part of retirement planning. One option is purchasing life insurance that includes long-term care benefits. These benefits use an accelerated percentage of the death benefit for that care, and Sines calls is a win-win option. The insurance policy cost remains the same, but allows for a portion of the benefit to cover long-term care—leaving the balance for beneficiaries, Sines explains.

Another option is using a portion of retirement accounts and savings for long-term care, such as annuities. These allow for an option to use a part of retirement payout to nursing homes in the event it is needed. If the long term care coverage isn’t needed then the funds remain in a great retirement vehicle.

And there continues to be the option of purchasing long-term care insurance. Early planning is key since the cost of long-term care coverage is lower when one is younger and healthier.

To determine what option is best, requires a full financial analysis, Sines says.

“The worst thing to do is procrastinate or ignore the issue,” he says. “Ensuring you are covered gives you peace of mind.