Too often, we can get so wrapped up in our work that we forget why we do what we do, until we get the occasional wake-up call.
One of these calls came at a conference I attended a few years ago. Nick Murray, a prominent speaker in the financial advisory community, declared very firmly that the two primary issues facing seniors today are their dignity and independence.
A profound thought indeed. Those two goals need to guide all aspects of retirement planning before any thought goes into things like investment allocation, insurance and estate planning.
Dignity and independence will not be achieved without some serious planning.
Every family and culture has differing ideas of what their responsibilities are in regards to their senior members.
Our government pension plans, Medicare and other social programs provide a significant baseline of care. Seniors also have varying levels of financial resources to help fuel their own dignified and independent lifestyles.
Statistics tell us that all these factors will be seriously impacted by the fact that families are less and less able to take care of seniors on their own, healthcare expenses are accelerating at a breakneck pace, and we are living longer lives.
The resultant strain means that many will outlive their nest-eggs! One viable option is long term care insurance, a type of policy that delivers a tax-free monthly benefit to cover in-home or facility long-term care.
A long term care insurance policy will pay out benefits when you need help with two or more of the six basic activities of daily living, or you have some form of cognitive impairment (such as Alzheimer's or another form of mental dementia) and your doctor requires you to have constant supervision because it is no longer safe to be on your own.
The other option is to use your retirement nest-egg or depend on your children to fund the expenses. That kind of violates the whole dignity and independence thing though, doesn't it? Most people I know share one common characteristic. They want to maximize the size of estate that they leave to their children.
I know full well that when it comes time to choose long-term care services, they will often choose less expensive inferior care options in order to prevent encroachment on the estate.
Those who choose to line the base of their retirement plans with long term care insurance will gladly accept a tax-free monthly cheque to fund the long-term care lifestyle that maximizes their dignity and independence.
Given a choice, I think most people would rather have an insurance company pay.
Unfortunately, long-term care insurance is not available to everyone. You need to medically qualify. Feel free to contact me through our website for a free eligibility checklist.
The opinions expressed are those of Richard Vetter, BA, CFP, CLU, ChFC. Vetter is a certified financial planner and owner of WealthSmart Financial Group in Richmond (www.wealthsmart.ca).
