Of all the planning that we do for families, the one area that’s continued to haunt me has been that of long term care (‘LTC’). By contrast, I feel great about the planning we do in the areas of retirement income planning and investment management for retirement.
For example, study after study show that for people with reasonably-probable longevity (longer life expectancy), annuities provide income security unavailable elsewhere. The retirement income plans with the highest ‘retirement success’ have a component of annuitization in them, provided by insurance companies’ guarantees and risk-sharing (sources available upon request). In addition, the financial and psychological benefits of building consistent supplemental and inflation-hedging income with dividend-paying stocks and well-managed bond portfolios helps to provide sleep-filled nights for me and for the families we serve, even in the face of great cultural and political uncertainties.
It’s that nagging, always-present feeling of the growing need for LTC services that keeps me up at night. We’re aging and living longer, and the statistics are not comforting. Have I done enough to impress upon you the potential need for LTC in your future? Is LTC insurance in its various forms the best solution for this growing area of concern? Am I being too idealistic to think that families, not institutions, will care for one another when the need arises? How can we individually and collectively address LTC needs in the most efficient and effective ways possible?
If your stomach is strong enough for a tour through the statistics behind these concerns, please click on this link to the Family Caregiver Alliance: LTC Statistics
With all of that said, we’ve done a fair amount of LTC planning over the years with the families we serve. For some, they’ve chosen one of several traditional LTC insurance options, paying premiums for the rest of their lives or until a qualifying care need arises and benefits are paid out. For others, a hybrid asset-based option was chosen. These effectively pair life insurance with LTC benefits to allow all premiums to be received back, either in the form of LTC benefits while living, or as a life insurance benefit at death. Others have chosen to self-insure with their often-substantial discretionary savings. By forgoing an insurance option, they retain control of their assets for possible use in a LTC scenario, otherwise passing savings on to heirs at their death. Finally, some have resigned themselves to the reality that paying insurance premiums may not be an affordable option, meaning they’ll likely spend their assets down to zero if a care need arises, leading to Medicaid paying for their remaining needs.
I share all of this because there is no single best solution. And maybe that’s the key to understanding my struggle and yours. If there was a simple answer to all of this, we’d simply do that and move on with our lives. But there isn’t a simple answer. Aging is complex. Families are complex. Finances are complex. Combine those things and the result is a whole lot of good intentions and educated guesses; the very things that don’t sit well with me and my brain that seems to have equal parts analytic and empathy.
Please recognize that I may never arrive at the perfect balance of protection and flexibility, security and sensitivity. That means I need you to meet me halfway on this one. Since I have access to the statistics, the strategies, and the products, I need you to share with me the care needs you’d like to plan for and the ways in which you’d like to prepare for those needs. Ultimately, you know your family best, so your approach is going to be the best for you and for them. I simply cannot know the best thing for you even though I’ll keep trying to figure it out. Is that fair?
Please consider these matters and plan for them, even if that means you choose to wait. Just make a choice, and please let me know how I can help you do that.
All the best,
Adam Cufr, RICP®