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LTC
Old 08-29-2013, 08:04 AM   #1
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LTC

Here is a link to a recent article on LTC http://finance.yahoo.com/news/wild-c...W4tVVM-;_ylv=3
I'm guessing most ER's have included this in their planning. We took out LTC policies well before I retired at 55. My goal was not to cover 100% of nursing home costs, but majority of the costs. I didn't want the premiums to be too high but wanted to reduce impact to assets if we do need LTC. What have others done on this issue?
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Old 08-29-2013, 08:09 AM   #2
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What have others done on this issue?
Here's a recent thread on the subject: http://www.early-retirement.org/forums/f28/ltc-poll-67962.html
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Old 08-29-2013, 04:15 PM   #3
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Just got a mailing from USAA about LTC, have not read it as yet.
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Old 08-29-2013, 04:42 PM   #4
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Originally Posted by larrytbm View Post
Here is a link to a recent article on LTC The Wild Card That Could Destroy Your Retirement - Yahoo! Finance
I'm guessing most ER's have included this in their planning. We took out LTC policies well before I retired at 55. My goal was not to cover 100% of nursing home costs, but majority of the costs. I didn't want the premiums to be too high but wanted to reduce impact to assets if we do need LTC. What have others done on this issue?
We bought it more for before ER since we have non-retired friends (multiple) suffering nursing costs for love ones while still working. 50 to 60 year olds.

We'll probably drop it later as we become more FI, especially as OMY syndrome grabs us and ups ramps up the war chest.
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Old 08-31-2013, 03:07 PM   #5
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As I have noted in similar surveys, I would rather invest/spend my retirement stash on loose women and good whiskey and not blow it on a LTCi policy.
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Old 08-31-2013, 04:11 PM   #6
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I'm guessing most ER's have included this in their planning.
Yes, I think most of the folks regularly posting here have dulled a pencil or two making this decision. In our case, we've chosen to self-insure which makes sense for us and others, depending on circumstances. If your numbers sent you the message to buy LTCi, then you did the right thing.

There are lots of things regarding FIRE which require planning and lots of things which could be a wildcard, per the article, destroying retirement. LTCi, or not, is just one of many decisions.

Here are some of my comments from the other concurrent thread:

Quote:
IMO, there are certain circumstances where LTCi would be helpful and the best solution to the LTC problem. The wealthy and the poor don't need it. Middle-wealth folks only need it if there is a spouse or other dependent who can't be protected from impoverishment or there are commitments to heirs which need to be kept and those issues are very dependent on the state in which you reside.

We recently put MIL into a NH. She had few resources and no living spouse or other dependents. She'll be private pay for 9 months (enough to allow us to get her into a "better" home) and then her SS and Medicaid will take over.

A close buddy who I consider middle-wealth shared his plan with me. He and his DW have a net worth of $900k of which $400k is their lovely home in northern Wis. They have an income of about $50k each (SS + pensions). If one is in nursing care, they pay down to the house + a bit over $100k (Wis limit) before Medicaid kicks in. So, at the death of the NH spouse, worse case, the survivor has a bit over $100k cash, a $400k house and an income of about $65k/yr. (His/her own pension and SS + 50% of the deceased's pension.) This is hardly impoverishment. So, they've chosen no LTCi. If the NH stay was less than $400k, the survivor would have more and they will have never hit Medicaid.

In our case, we have a bit more and consider ourselves able to self insure, not leave the surviving spouse impoverished and keep our commitments to pay for the grandkids' college, have a trust for a special needs grandson, etc.

If your particular financial circumstances and the rules of the state where you live dictate that a NH stay for you would leave your DW with near zero assets and income, or if you have made some commitments to heirs you wouldn't be able to keep if you private pay for NH care, then you better look at LTCi despite the issues with the product.

Each situation is different. You have to understand the rules in the state where you live. You have to understand your ability to pay and your ability to shelter resources for the surviving spouse. You have to nail down exactly what commitments you want to make to your heirs and see if you can fund those things apriori (529b, special needs trusts, etc.) with funds not visible to Medicaid.

As samclem said, a catastophic type of policy where the insured pays the first, say, $200k or 2 years, would really fill the bill for many of us. It should be inexpensive since very few would ever collect. And it would protect middle-wealth families from spouse impoverishment. Apparently the insurance companies don't feel they'd make enough money for issuing a policy like that to be worthwhile.
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Old 08-31-2013, 04:48 PM   #7
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The result I took away from the other discussion was that those that bought it are happy with their decision, and those that decided against it are happy with their decision :-)

Really, though, if you can afford to self insure, that's often the best choice. Consumer Reports said that was 2.5M net worth. Or if you don't have many assets, your plan should be to structure your finances so spending down to engage medicare won't leave the survivor in dire straights.

The other take away was that the LTCi options that are offered are not what many of us want. I think they sound a bit more like 'whole life' as opposed to 'level term', taking life insurance as an analogy. The idea behind the products currently offered is to keep the cost somewhat even over a period when your likelihood of having a claim goes up dramatically. But the protections on keeping the costs stable are not usually suficient. There is also the real possibility of running into a spending cap.
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