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I watched a YouTube that said there are 3 ways to tackle the LTC problem.
1. Long term care insurance, (which is more costly as we aged),
2. Whole life w a LTC rider, (maybe much more costly comparing option 1), or
3. Self funding from investment.
Your thoughts. Thanks in advance.
My wife and I are both 60 and fully retired, and are blessed to be fully capable of self funding.
Back when we were in our mid-40s we didn’t know how things would turn out and we purchased long term care insurance. Our annual premium is fixed at ~$2,500 per year each and it pays out ~$10,000 per month. We continue to pay the premiums and pray we will never need this, and fortunately the premiums are a small expense in the big picture.
Generally I lean to the side of self-insurance, but I have seen first-hand how long term memory care can burn through cash reserves.
My mother in law spent 5 years in memory care and the fact my father in law had purchased LTC insurance for her years before enabled her to not have to sell a farm or two to pay for her extended care.
I had a close friend who had a father get Alzheimers at around 60 and he spent greater than 10 years in memory and skilled nursing care. They burned through well over a million dollars in that time. Self funded.
Unforturnately virtually all of us will be faced with situations like this — for a parent, sibling, spouse or self. There is no one-sized answer that fits all of our situations or needs, and it is something every person needs to build a plan to address.
Your close friend’s father’s scenario is one of the reasons I want to be sure to get into a non profit CCRC before we turn eighty. Half of my direct family died with a form of dementia so getting into a facility earlier is a priority. We do not have LTC insurance but the CCRC will not kick my wife out if we run through all of our assets, and it will insure if we need it we will get high quality care when it becomes necessary. As I have written many times before my mother in law lived to 103 as did her aunt so there is a good chance so will my wife.
The LTC deductions must also exceed the standard tax deduction make a difference on your taxes. To claim this medical expense deduction you must itemize on schedule A to utilize tax-deferred IRA or 401K dollars to pay for long term care (LTC) expenses on your taxes that exceeds 7.5% of your Adjusted Gross Income (AGI).
Roth Conversions I did to provide around one million dollars all in safe assets; CDS. Would have hated to see losses after paying the taxes