What To Do When Long Term Care Insurance Alone Isn’t Enough
Before looking for the cost of long term care protection, you need to know what you want your insurance to do for you. Last week, we looked at a single woman who wanted to be able to decide when and where she received long term care. For her, traditional long term care insurance was the best answer. Not everyone’s goals are the same. Maybe your situation is more like Art and Maria’s.
Art and Maria have saved for retirement diligently throughout their working years. Their plan is to withdraw 4% of their $500,000 retirement fund each year. The additional income of $20,000 a year combined with their social security income of $36,000 would provide enough income to live comfortably in retirement.
During our meeting, Maria mentioned how happy she is to be able to enjoy retirement without becoming a burden to their children, but Art brought up his concerns about what would happen to their income if the market drops or if they need to pay for long term care.
Art was worried because a few times during the 35 years they’ve been investing for retirement the stock market dropped more than 30% and took a few years to recover.
If their $500,000 retirement account shrinks 30% to $350,000, they would need to withdraw nearly 6% a year instead of 4% in order to receive that $20,000 income they’re counting on. Having to take bigger withdrawals means the account value has to rise faster to recover from the loss. On the other hand, if Maria or Art need long term care, withdrawing $50,000 or $100,000 per year to pay for care would quickly empty their retirement fund.
They needed an income they could rely on for the rest of their lives along with long term care benefits. We moved some of their savings into a plan that offered guaranteed lifetime income. The plan also provides additional benefits to help cover long term care costs.
Art felt relieved knowing that the new plan would provide Maria an income she couldn’t outlive. Maria was glad the insurance would help protect Art and their children from the burden of taking care of her if she needed long term care.
Next Steps:
Worried you might not qualify for long term care insurance? Check out the next post in our series below.
What’s your story? You can save time and compare different plans quickly by taking advantage of my experience with a broad range of insurance plans that offer long term care benefits. Give me a call to get started. If you want to learn more about calculating the cost of long term care insurance, subscribe to our newsletter.
