Advice for People Who are Thinking about Continued Care Facilities but Don’t Have a Definite Financial in Place?
I suggest you research and tour the facilities in your area starting at about age 65, or sooner if you are concerned. The purpose of this is to be able to put in writing to your family where you would want to be if the need should arise. Since you would have already been there and chosen the place yourself, it takes a great burden off of your family and can better assure you will be where you want to be when the time comes. Next, look into the cost and determine how you will pay for it. For example:
- After allowing for a reasonable cash reserve, add up all of your investments, savings, lump sum retirement plans, etc. Take this total and assume that if it is invested properly it is reasonable to expect that you can withdraw about 4.5% per year and have the money last for the rest of your life. i.e. $400,000 x 4.5% = $18,000/yr or $1,500/month
- Next, add to that monthly number your other sources of regular monthly income. ie. $1,200 one social security + $800 the other social security + $1,700 pension and the $1,500 above = $5,200/month total income available.
- Determine how much income the well spouse will need to live a reasonable life and subtract it from the total available. i.e. $5,200 less $3,000 = $2,200 remaining balance.
- Determine how much income the ill spouse will need for things that are not covered by a care facility (hair cuts, dental and eye care, health insurance, etc.) and deduct it from the remaining balance above. i.e. $2,200 less $300 = $1,900 per month remaining available to pay for the ill spouse’s care needs.
- Determine how you will cover the shortage. As noted above you have already researched facilities and have a good idea of the cost. i.e. $4,500 monthly cost of the facility less $1,900 available = $2,600 monthly shortage.
Important: Keep in mind that these are not actual figures but only an example. You will need to determine your actual figures. Often, long term care insurance is the least expensive way to pay for future care needs and many plans will pay for you to have someone care for you in your home. However, once again I cannot stress enough that you need to address this as early as possible to have the greatest chance of preserving the assets you have spent your life building so it can go to who you want it to go to rather than the cost of care. This can also better assure a reasonable quality of life for whatever years you have left on this earth. The earlier you start, the less expensive it can be to have a plan in place to help cover the cost. And, if you wait until you need it, you most likely will not qualify to purchase it.
Even when you think you have it all figured out there can be things that come up that you hadn’t thought about or expected. This happened with my mother. There was a time for about six months that we needed to pay for four places for my mother at the same time!
She was living at the assisted living facility but wasn’t willing to sell her home yet since she felt she may be able to go back there at some point. While at the assisted living facility she became ill and went to the hospital for a few weeks. When ready to be dismissed from the hospital she needed a nursing home temporarily until she was well enough to go back to the assisted living facility. Her assisted living facility apartment was a one bedroom. It became clear that she was going to need 24 hour live in help when she returned there. Since a two bedroom unit came available for the first time in many years, I put a deposit on it so her aid would have a room to sleep in and my mother could still have some privacy. At that time we were paying for #1 Her condo – taxes, monthly common fees, insurance and maintenance costs, #2 Rent on the two bedroom unit to keep it available for her #3 Rent on the one bedroom unit since all of her things were still there and I couldn’t deal with moving it all just yet. #4 The nursing home (after 90 days of Medicare). Fortunately we are now down to one place but it took about six months for that to happen. You need to be ready to handle the unexpected.