Factors that Affect Seniors
With pensions disappearing, uncertainty surrounding Social Security, and care costs rising, many seniors are spending down the assets that support the type of care that they need. While the financial aspect is a major factor, there are also other factors that are important to consider:
• Making sure that a Power of Attorney is in place
• Picking a trustworthy executor
• Sorting through the estate planning process
• Efficiently planning to leave a legacy
At Wisdom Wealth Strategies, we navigate through these factors with our clients to create a plan that is able to address the unique challenges that seniors face.
The Biggest Fear
People spend their entire lives building a nest egg and working toward a retirement goal and this is a very important and delicate process. This takes time, discipline, and careful planning and the overwhelming fear for many seniors is that they will run out of money.
The rising cost of healthcare can play a significant role in eating away at the nest egg that took a lifetime to build. At Wisdom Wealth Strategies, we evaluate each specific situation in order to present all options which may help to mitigate the erosion of assets.
The Cost of Care
Long-term care costs increase by 3.3% every year. The national average cost of care for an assisted living community is $35,544 , and in 10 years it will be closer to $50,000. According to the U.S Department of Health and Human Services, 70% of people who live to the age of 65 will need some form of long term care.
Who Pays for Care?
In 2007, over $200 billion was spent on long-term care in the United States. It is a common misconception that our government will assume the costs of care in retirement. The following chart proves that to be incorrect.
Medicaid was designed to act as an aid to pay for care for individuals with lower income and asset levels. While these levels vary by state, most require people to reduce their asset levels to as little as $2,000 before they can qualify for assistance. This chart illustrates that Medicaid still pays for almost half of the long-term care costs.
Medicare is generally available for those age 65 and older and pays only for short-term care that is less than 100 days in a skilled nursing facility for rehabilitation. It is important to note that neither Medicare nor Medicare-supplement insurance policies cover this type of care. In fact, the Social Security Administration now includes a note on annual statements saying “Medicare does not pay for long-term care, so you may want to consider options for private insurance.”
Out of Pocket
The rising costs of care are likely to fall on individuals either by relying on savings, tapping into benefits of a long-term care policy, or other personal assets. This is the time to plan!
At Wisdom Wealth Strategies, we work to create a care plan that matches each client’s financial situation while factoring in the rising costs of care.
Normally, individuals are required to spend almost all of their savings before Medicaid will cover the cost of long-term care. In an effort to combat these restrictions, many states are in the process of creating Partnership Programs. By purchasing a “Partnership Program approved” long-term care insurance policy, individuals may be able to protect a portion of their retirement savings and still qualify for Medicaid. At Wisdom Wealth Strategies, we address all of the opportunities presented by this program when creating a long-term care plan for the future.
At Wisdom Wealth Strategies, we are unique because we specialize in planning for veterans and their surviving spouses. The Veterans Administration offers the opportunity to qualify for aid to supplement the cost of care to servicemen and women. There are many different benefits to explore, but a veteran may qualify for tax free monthly income.
It is important to speak with an advisor at Wisdom Wealth Strategies to see if this might be a viable piece of a personalized long-term care plan. We work with families to plan for these types of situations and structure a customized financial plan that can extend the life of the current asset level and create solutions to minimize the effect of rising costs.
Securities offered through Cadaret, Grant & Co., Inc., member FINRA / SIPC
Wisdom Wealth Strategies and Cadaret, Grant are separate entities.
Representatives are licensed to offer securities in the following states: California, Colorado, Minnesota, Nevada,
New Mexico, Oregon, Texas, and Wyoming. Additional states may be added.