Did you know most people retire flat broke and end up almost completely dependent on the government for their basic needs? And, those needs are often met at the lowest level.
For example, a person may only receive a Social Security check for between $500 and $1200 and this is supposed to pay for all or most of their expenses. Do you want to live like that? If you’re like most people, you don’t. Here’s how to make sure that never happens.
Save More Money
Most people don’t save enough money, and they end up living out what are supposed to be their golden years in frustration. Not having money, and not being able to work to make more, will make you feel helpless and depressed.
If you’re not saving at least 25% of your income, you need to meet with a financial planner right now to form a financial strategy that allows you to do this. Ideally, you will ratchet that savings up to over 35% of your income, and purchase insurance to cover any shortfall you need in your old age.
Make A Long Term Care Plan
Long-term care insurance isn’t always necessary, but a long-term care plan is. Most long-term care strategies involve the purchase of LTC insurance, which pays for long-term care expenses you incur when you need them (i.e. nursing home care, home nursing care, etc.).
Some forms of life insurance also offer a supplemental long-term care insurance rider.
LTC insurance is usually structured such a way that it provides you with daily benefit limits. For example, a policy may pay a $200 per day benefit for LTC costs. This money can be spent in any way, including for skilled nursing care, or at-home care.
Talk To An Attorney
CT Elder Law Attorney recommends that you speak with an attorney about your long-term care needs. An elder attorney can also help you protect your rights when it comes to Medicaid planning, elder abuse, and other related issues.
Most attorneys that specialize in elder law can also help you set up a trust, will, and help you plan out the probate process after your death.
Buy Life Insurance
Life insurance is an underutilized method for preserving assets in your old age. Most people are afraid to spend down their other assets because they worry about having money left over after their death.
But, life insurance can be purchased to replace lost assets that have to be spent down. For example, you may need to spend down substantially all of your savings to pay for long-term care needs, medical expenses, or just basic living expenses.
This may deplete savings you need to pay off any remaining debts you have, your funeral and burial or cremation costs, or an inheritance for your children.
Life insurance lets you restore your savings after death by paying a tax-free death benefit to your heirs. You spend a small portion of your savings now, and a benefit is payable when you die. This benefit can be structured to replace some or all of your savings.
Make Old-Age Plans
Most people don’t want to think about this, but you need to be ready for the possibility that you will lose your mental faculties when you get older. It’s not something you normally associate with “dignity,” but it’s a fact that roughly half of everyone alive today will require some form of long-term care.
Fortunately, there are ways to plan around this. First of all, you can set up a will and trust with your lawyer. You can let your children know where all the documents are located. You can also let your children have access to your property or, if you’re comfortable with it, hand it over to them and then retain tenant privileges in your former home for the rest of your life.
If you transfer the deed to your property, and most of your belongings, a skilled nursing facility cannot force the sale of those assets before Medicaid kicks in and pays for a portion of your long-term care needs.
Of course, if you’ve purchased insurance, this may be a moot point. Talk with your lawyer about various medicaid planning strategies and whether they make sense for you.
Also, have a frank discussion with your children about the possibility of dementia and Alzheimer’s in your old age and plan out in advance how you want your assets distributed or handled when you’re no longer able to make your own decisions.
Attorney Stephen O. Allaire is the manager of the law firm of Allaire Elder Law, LLC, Connecticut elder law attorneys who provide legal counsel on elder law and elder care. He is a graduate of the United States Military Academy at West Point, and Georgetown University Law Center. He is past co-chairman of the Connecticut Bar Association Elder Law Sections subcommittee on Medicaid, and past Treasurer of the Section. His practice is elder law and elder care, dealing with Medicaid law, Veterans benefits, trust and estate planning and administration, home and asset protection, Medicaid applications and appeals and special needs trusts for those with disabilities.