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The Planning No One Wants to Do

The Planning No One Wants to Do

August 06, 2021

No, actually, your Smith and Wesson Isn't a Viable Long Term Care plan. 

I can't tell you how often I have hear the Smith and Wesson plan proposed by clients when we try to discuss long term care planning.  But it is almost always younger folks who try to bypass the conversation with glib comments.  I don't hear this type of response from people (or their kids) who are actually in need of long term care services.  These people are focused on obtaining quality care, and figuring out a way to pay for it.  None of us like to ponder our own mortality, or the reality that we may someday lose our independence.  The reality is, however, that 50% of people over the age of 65 will need to pay for long term care expenses at some point in their lives.  

The cost of long term care, in facility, or even in home, is staggering in New Jersey and far exceeds the national average of $100,000 per year.  And no, Medicare doesn't pay.  In fact, there are no government benefits available except Medicaid.  And Medicaid is not an option unless you have spent down all your assets, including your home.  A healthy spouse is permitted to retain a small income and asset allowance, and is allowed to retain the family home to live in - but the state may file a lien against that home value to recover the cost of care once the home is sold.  

Our financial plans always include an analysis of long term care costs, and the resources available to pay for such care.  Insurance is always an option.  It is not cheap, but not having insurance may also be expensive.  Gifting away assets to accelerate Mediaid eligibility is an option for some people, but it involves tradeoffs many will find unpalatble.  Furthermore, Medicaid rules are extremely complex.  "Gifting" strategies need to be put in place many years in advance of the actual need and supervised by a qualified elder care attorney (and reviewed by your financial planner)

There is no "one size fits all" advice.  I like this article by Morningstar retirement guru Christine Benz.  It concisely sums up the options.  

If we haven't discussed long term care in a while, and if you are over 55, we need to have that conversation.  Give me a call to schedule your long term care strategy review.