Help Prepare for Health Care Expenses in Retirement - 2
By Saghir Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live with dignity and fulfill their moral obligations towards charitable activities)
Factor in long-term care
Long-term care involves services people may need if they’re chronically ill or have disabilities rendering them unable to perform activities of daily living such as bathing or dressing. The need to prepare for those services may be more important than you think: According to the U.S. Department of Health and Human Services , more than half of Americans age 65 or older will need long-term care services at some point.
In the case of Medicare, coverage kicks in only if long-term care is medically necessary—and then only for 100 days in a skilled, or specialized, nursing facility following a three-day inpatient hospital stay. The alternative—staying in a semiprivate nursing home—can prove costly. The national median cost of a semiprivate nursing home room is more than $7,000 a month .
Research options to fill the gap
Whether or not you qualify for certain coverage under Medicare, you’ll likely need an additional resource to help balance benefits and costs. Those who have Medicare may want to consider a supplemental health insurance policy such as Medigap . It helps you pay for some of the costs Medicare doesn’t cover.
Another option is purchasing a long-term-care insurance policy, which may help you avoid, or at least reduce, the amount you might need to dip into your savings for related costs. The average stay in a long-term-care facility is four years, so if you don’t opt for long-term-care insurance, you may need to set aside roughly $250,000 to $400,000 to pay for it yourself, depending on your required level of care.
The two main forms of long-term-care insurance are traditional and hybrid. The traditional variety typically involves paying an annual premium and lets you choose how much coverage you want.
The hybrid option is a life insurance policy that allows a portion of the cash value of the policy to be used for long-term care. Beneficiaries can also receive a death benefit when you pass away. Death benefits will typically be reduced if long-term care benefits are used.
“Retirement planning is about understanding and mitigating the biggest risks,” Larson explains. Then you can decide how to address the risks so that you’ll feel comfortable about your future.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor or certified financial planner. Mr Aslam does not have anything for sale.)
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