If you are in your 50s, you face a serious dilemma. It's one you can't do anything about. I'm not talking about the economy or the plummeting value of the stock market. I'm referring to the one thing that's guaranteed to go up every single day. Your age.
No matter how the Dow Jones performs today or tomorrow, the fact is you are getting older. Hopefully you are living a healthier lifestyle. Thanks to eating those five servings of fruits and vegetables as well as advances in modern medicine it's more likely than ever that you will live well into your 80s, your 90s and quite possibly even past age 100.
When you live a long life, the chances are dramatically increased that you will need some long-term care. Most people understand and accept that as fact. The disconnect comes when they think about how they will pay that bill. Don't count on a personal government bailout to pay the bill -- government will have too much else on it's plate. And, your 401k -- now a 201k -- well, can you really count on that being sufficient? To quote Clint, "are you feeling lucky?"
That basically leaves you several options. If you are able to have accumulated enough savings, you'll be able to spend those savings until they are depleted and then turn to the government for public assistance (welfare). If it sounds harsh, it's a matter of reality that you need to face. Uncle Sam will (hopefully) pay the bill but they will also determine what kind of care you'll get ... from who ... and where. Free isn't always good.
Your other options are to take a reverse mortgage on your home -- assuming it has residual value. That is certainly a viable option, unless you were planning to leave the full value of the home to children or other heirs. And, finally, like some 8.25 million other Americans you can purchase long-term care insurance. About 400,000 purchase coverage every year on an individual basis or through their employer.
Given the harsh realities, one might think there would be lines of people waiting to purchase this protection. A recent long-term care insurance industry association study revealed two significant reasons more individuals are not (yet) buying protection. The first is that individuals perceive the cost of insurance coverage is actually higher than actual costs in most states (long-term care insurance premiums vary from state to state typically due to various state-required provisions). I'll address that misperception shortly.
The second reason many consumers cite for not purchasing coverage is a belief that planning should coincide with retirement. As a result of waiting until their mid-60s, a significant percentage of applicants no longer qualify for significant discounts that most insurers offer to those who are in good health. A fair number, according to industry experts, are no longer able to health qualify for coverage. They cannot purchase long-term care insurance protection -- no matter how much they might be willing to pay.
So let's tackle some of those vital misperceptions head on. The first misperception is that you won't need long-term care. Too many articles focus on averages; which point to the fact that one out of two people will need long-term care. I can hear you saying, "that's right, I'm going to be the one who won't need it." If you are married, I guess that means you have condemned your spouse to needing care. Good work.