“Long-Term Care Can Dismantle Retirement”

Long-term care can dismantle a well planned retirement plan. Many people believe that a federal program such as Medicare or Medicaid will pay for their care, or veterans hope the VA will cover the cost of care. These programs, however, primarily cover medical procedures or rehabilitative care.


Long-term care requires custodial care, which is defined as the assistance or supervision that a person who is physically or cognitively impaired needs in order to get through the day. With few exceptions, no federal or state program will pay for custodial assistance over an extended period of years. The family therefore is forced to pay out of pocket.


While you still may believe that you have enough assets to pay for care, relying on your retirement portfolio to pay for care is a problem. It is problematic because it has likely been committed to generating income to support your family’s lifestyle. If you have to reallocate your retirement assets to pay for care, you reduce the generation of monthly income. It can also cause other consequences such as:


Taxes: What would it cost to sell your qualified funds or taxable investments with a low cost basis?
Market Conditions: What if your investments need to sold in a down market?
Liquidity: Could you sell your assets, and if so, would you incur a loss?


If your illness or condition lasted long enough, it could threaten the financial viability of your surviving spouse and/or those who may depend on an inheritance.


I would like to thank Harley Gordon and his staff at http://www.ltc-cltc.com/ for providing a great deal of the information for this essay. If you want to learn more about extended care planning, go to my website, www.TheDeGeorgeAgency.com, and let’s get a conversation started about how I can help you. You can also become a subscriber to my blog (http://www.degeorgeagency.blogspot.com/). The DeGeorge Agency is a “Family Helping Families.”