For many Baby Boomers, this scenario sounds all too familiar:
You worked hard to be able to retire and enjoy your golden years...but you're worried you won't have enough to pay for long-term care. The kids have already agreed to help care for you in your home. But you know they'll face financial burdens, too, like taking time off work and doing your cooking, cleaning, and grocery shopping. You want to be able to leave a little money for them when you're gone, but with the cost of any type of care being so high, how are you supposed to make that happen?
There IS a way to help ease the financial burden on both you and the kids. Many people I talk to aren't willing to discuss this issue with their spouse and kids. But if you are, I'm here to help - and it can save you a lot of money and stress in the future.
How to Pay for Long-Term Care
Traditional long-term care insurance is the most well-known way to pay for future care. It provides the cash you need to pay for that care, wherever it takes place:
- in your home
- in an assisted living community
- in adult day care
- in a nursing home
If you'd prefer your care happens at home, you're not alone! Most of my clients would also like to receive their care in a comfortable and familiar setting. However, that kind of help doesn't come cheap. According to the 2021 Genworth Cost of Care survey, the average annual cost for in-home long-term care is $61,776 (or $5,148 monthly). And that's just one year. What if you need care for 2 years or more? Did you budget for those kinds of costs when you retired?
In many families, one or more of the kids agrees to help in order to help reduce the cost. But with long-term care insurance, there's no reason that your kids can't be financially compensated for taking on extra responsibility. After all, if they're caring for you, it's going to mean lost hours at work for them, which adds up to lost income.
A Huge Help: Informal Caregiver Benefits
Informal caregivers are people who do not live with you, but provide frequent, even daily, help with your care. In this case, your kids. Informal caregivers can help with non-medical activities like bathing, dressing, and eating, as well as handle your shopping, bill paying, and more. But they can't handle everything, which is why you may also need a certified in-home health aide with professional medical training.
Many long-term care insurance companies understand both types of need. Some LTC policies split the cash benefits available for your care between (a) informal caregivers and (b) formal caregivers (certified in-home health aides). For example, you can get a policy that pays your professional health aide 75% of your daily benefit amount, and pays your child the remaining 25%. This helps your caregiver stay on top of their own financial responsibilities, while helping you stay in the environment you prefer.
To wrap up, there are quite a few benefits to a policy that pays for formal and informal caregivers:
- Relieves your worry about having enough money to pay for long-term care
- Lets you stay at home, where you're comfortable
- Provides financial compensation for the children or grandchildren who help take care of you
- Prevents any inheritance or savings you want to pass to your kids from being spent on your care
Long-term care insurance that offers informal caregiver benefits keeps you in control of your life.