What are you budgeting for LTC?

[Jerry1]

My goal is to pass at least a million dollars to my daughters. That same million is also my LTC number. If things go well, I should have more than that and both goals may be obtained. If not, as long as my daughters do not have any financial burden due to mine or DW's health, that will be success. No plans on going into anything like a CCRC. We intend to rely on home care as long as possible. We are willing to move into a smaller dwelling and it may even be in an assisted living arrangement but we'll cross that bridge if or when the situation calls for it.

 

[COcheesehead]

I have equity in my house. Some people have a LOT of equity in their homes. That equity is a possible source of funds, should the need arise. Options. I'm single, so hopefully, if I need to go into LTC, it will be a situation that I'm aware and can prepare to enter voluntarily. If not, then sometime between entering LTC and burning through more than $350k+ of monthly fees (the baseline amount I'm attempting to reserve), I'm going to need to do something with this house, and I won't be a landlord.

Couples hopefully won't need to sell if one spouse goes into LTC, but eventually only one spouse will survive the other, and there's always the option to sell and move to a retirement community, apartment, ALF, etc. Options.

My father sold his condo (and got rid of his belongings in various ways) from his nursing home bed, with help from his girlfriend and us kids. He wasn't going anywhere. It happens.

Everyone in my family that had to be put into assisted living was really not in a position to sell a house. I hope things are different for others needing to sell, but to depend on extracting funds from a home for care to me seems problematic.

 

[FindingForward]

The “excuse” isn’t you running out of money. They will say you are beyond the care of the facility.

Also some non profits are getting bought up by private equity. A non profit today doesn't mean it will be tomorrow

 

[COcheesehead]

Also some non profits are getting bought up by private equity. A non profit today doesn't mean it will be tomorrow

I haven’t checked recently, but a year ago, one of the highest defaults in muni bonds were in assisted living centers.

 

[ElizabethT]

Zero. Our plan is to instead reallocate our budgeted, annual Travel funds for LTC, should there be need. Our assumption being that we'd no longer be Traveling.

 

[braumeister]

I haven’t checked recently, but a year ago, one of the highest defaults in muni bonds were in assisted living centers.

Fortunately, the financial status of a CCRC can be checked fairly easily.
Fitch and S&P both issue ratings on a lot of them, and the Ziegler 200 is another decent rating source.
I've found that good ones are very willing to show you their financials.

 

[sdawson]

I always thought the same when people say we have the equity in the house for LTC. What if just one needs it? What if both need it?

I too looked at LTC insurance, but the math alone did not work out. I'd be better off putting the premiums into a fund paying 5%. The math worked out that if I needed it before the policy was 15 years old, it would be worth it. But at 15 it breaks even, and then I lose money after that compared to just self insuring for the amout of the payout. As I was looking at this at age 60. Considering family history -- nobody in either my wife or my family needed care before age 75 -- it seemed like a poor product.

And that was LTC just for me. Buying it for both my wife and I was too prohibitive. And due to far too many stories of having to coerce the insurance companies to actually meet their agreements made me move to self insure.

I'm surprised no one has mentioned QLAC as part (not all, but part) of a solution. I put in the maximum I could last fall (age 62), which is tentatively scheduled to payout at age 78. But I can delay that up to age 85 if it not needed before then, which increases the monthly payout of course. That QLAC has payout for my wife (75%) if I pass before her,and has 2% COLA. As my wife has very little pre-tax savings of her own, we can not get a QLAC for each of us. So we just have the one in my name with her with survivor benefits.

Now that is not enough. So I have actually bucketed one pool of money (not mentally bucketed, actually bucketed in a separate account), and am leaving this in a 401K plan (not doing a roth conversion for this), which is quite diverse and is 80/20 stock/bond. This currently has a balance of $370K, and will not touch that til RMD's require it. The reason to leave this in a pre-tax account is that one can deduct LTC as a medical expense so it is better to have pre-tax dollars reserved for that.

So the pools of money for self-insuring are the QLAC, wife and my social security (I am delying til age 70), the 401K, and then a small pension. Those all put together (withm RMD only on the 401K) would yield about $20K/month when I am 80.

But a) that is not guaranteed as one does not know what stock will do and b) that would not be enough if two of us needed it. While the QLAC, and SS, and pension are know quantities. the 401K is not. And who knows how inflation is going to set in. Still, we can take more than the RMD from the 401K, and we can use other Roth converted funds which will be done outside of the 401K, and then selling the house if needed.

The house and Roth would ideally be part of out estate for our kids, but if needed before then for LTC, they are there.

Which brings us back to the quote above. If just one person needs LTC, then is selling the house realistic? In our case it would be as we have a daughter (age 30 now) who has been clear she would want us to be with her. We would not have her provide LTC for us as that is too much of an ask. But if one of us needed LTC but the other does not, then selling the house for funds and living with my daughter would be an option.

 

[GravitySucks]

In Fidelity planner I put an extra $100k for two years into the expenses to get it to stop telling me I haven’t accounted for care.

Single guy. I worked in a nursing home for a few years after high school. Most men didn’t last six months. The women seemed to linger. I have also left instructions with my medical POA that if I’m in memory care to not give me any antibiotics and all the morphine.

I’d rather be eaten by a bear than live in a nursing home.

 

[tn3sport]

My plan is called "The Golden Girls". Remember the TV show staring Betty White and others?
Share an apartment w/ 3 others. Also, hire a 24x7 companion care company (meal prep, simple cleaning, med reminder, etc). Split the bills between us.

I've seen the majority of LTCI plans never be used... even after paying into them for decades...
Check your fine print. What's your holding period (aka Elimination period). Most common is 90 to 100 days. You get no payment from them for that period. How about quarterly evaluations? You plan likely requires that. You get a reduced payment if you are not in need of 100% care.
You also need an advocate (hopefully, you raised good children) that can make calls to the LTCI company. It will require many calls... The authentication process alone can be very complicated for someone w/ the onset of a memory disorder.
Just invest in TIPS every year and spend it down when the time comes....

 

[COcheesehead]

My plan is called "The Golden Girls". Remember the TV show staring Betty White and others?
Share an apartment w/ 3 others. Also, hire a 24x7 companion care company (meal prep, simple cleaning, med reminder, etc). Split the bills between us.

I've seen the majority of LTCI plans never be used... even after paying into them for decades...
Check your fine print. What's your holding period (aka Elimination period). Most common is 90 to 100 days. You get no payment from them for that period. How about quarterly evaluations? You plan likely requires that. You get a reduced payment if you are not in need of 100% care.

The one I had also required that you have 2 ADL’s - certified by a doctor. If you look at the list of ADL’s you are pretty far along at that point.

 

[disneysteve]

I've seen the majority of LTCI plans never be used... even after paying into them for decades...
Check your fine print. What's your holding period (aka Elimination period). Most common is 90 to 100 days. You get no payment from them for that period.

My mom's LTC plan had a 90-day period but we learned that if she was getting care at least 4 days/wk they credited her for the full week which made it a lot quicker to get to 90 days. That was 3 years ago and she's been collecting benefits ever since. Thankfully John Hancock has been excellent to deal with.

 

[razztazz]

Also, hire a 24x7 companion care company (meal prep, simple cleaning, med reminder, etc).

How do you go about doing that? How does one go about just hiring a 24/7 part butler/part nurse?

I spent part of the morning touring a Senior's community apartment complex. Not a care type facility but I thought ditching the house would aid in keeping the creeping requirements of aging on a short leash. The built-in amenities of the place fill some of those requirements. But I don't really want to pay for amenities and other overhead I don't really need until I need them.

 

[Flyfish1]

I’d rather be eaten by a bear than live in a nursing home.

Ouch - that's a horrible death. That and sharks scare the heck out of me. I get your point, but I can't even imagine the brutality of such an event. At least in a Nursing Home I'm hopefully clueless. Anyways, hope for none of the above.

 

[Koolau]

Ouch - that's a horrible death. That and sharks scare the heck out of me. I get your point, but I can't even imagine the brutality of such an event. At least in a Nursing Home I'm hopefully clueless. Anyways, hope for none of the above.

Mosquitoes are still the big killer!

 

[Sunrise_Ray]

With everything that is said above, all I have to say after having this discussion with multiple financial planners is that one is better off carving a portion of the investment accounts into an income stream, reinvesting that stream and when LTC is needed, dip into this and self-fund it. Of course, it will not work for everyone, but for those who have enough assets, this is a better route.

I even tested out buying it for me and got a firm quote on it with the various options of total coverage, number of years, and all of that amounted to needing $600 per months for over 20 years, and that itself was enough for me to say that I can put $600 a month in a combo of Vanguards funds and I will get MORE than what LTC was going to give me in the end.

There goes LTC business and if most of us do not do it, it will change to something else and stop selling the false promises (again not all).

Financial Planners want to sell Annuities, ULIP, WholeLife and other Colorful Insurances since they are laden with commissions, but no-thank-you.

SRay

 

[INTJ10]

We put in an extra $30K per year per person for 5 years in our Pralana model. That would be on top of our normal budgeted expenses.

 

[38Chevy454]

Self-insure for DW and me, and if not needed or less than the approx $250K budget estimate, than heirs will get more. If costs are higher, heirs get less.

 

[someguy]

Fortunately, the financial status of a CCRC can be checked fairly easily.
Fitch and S&P both issue ratings on a lot of them, and the Ziegler 200 is another decent rating source.
I've found that good ones are very willing to show you their financials.

I tried looking up a half dozen CCRC in my area on https://www.fitchratings.com/ and couldn't find a single one. I'm probably doing something wrong -- any quick pointers on how to find CCRC ratings?

 

[braumeister]

I tried looking up a half dozen CCRC in my area on https://www.fitchratings.com/ and couldn't find a single one. I'm probably doing something wrong -- any quick pointers on how to find CCRC ratings?

Some are rated by Fitch, others are rated by S&P. Many are not rated at all by anyone.
Not a rating service, but for the larger ones, look at the Ziegler 200 for some good analysis.
For smaller ones, you're kind of on your own but you can usually get their financials by asking them.

There are plenty of other options. For example, if it's a non-profit you can look at their 990 reports here.

 

[Teacher Terry]

In Fidelity planner I put an extra $100k for two years into the expenses to get it to stop telling me I haven’t accounted for care.

Single guy. I worked in a nursing home for a few years after high school. Most men didn’t last six months. The women seemed to linger. I have also left instructions with my medical POA that if I’m in memory care to not give me any antibiotics and all the morphine.

I’d rather be eaten by a bear than live in a nursing home.

I told my kids the exact same thing as you. I said just keep me doped up on morphine so I don’t know that I have an infection and let me go. I do not want to live with dementia. Luckily no one in my family ever had it, but you never know.

 

[susswein]

The price of a 12 gauge and one shell.

 

[tulak]

And when dementia sets in, you’ll forget what it’s for.

 

[skyking1]

A local nice senior living facility charges close to $100K/year for the highest care level that they provide (bed-ridden and in diaper ).

While I do not wish to live in that condition for long, I can afford that indefinitely for both of us (unless the market crashes really hard).

you've expressed the most important part of my philosophy. I have no interest in existing in this manner.
I don't care how you dress up the situation with niceties, I will not be warehoused as a semi-functioning individual.
I can price the facilities that are a few blocks from us to get a feel for the current costs, but it won't be for a long stay for myself.

 

[Koolau]

The price of a 12 gauge and one shell.

Too messy. Consider who you leave behind during a final exit. Most of your actual loved ones want you to spend what ever it takes to keep you around and comfortable. Be certain you have an advocate for your care. It makes all the difference. As my mom went into pneumonia, I insured that she didn't struggle to breathe. I'm sure that last shot her PCP ordered at the end was the equivalent of the 12 gauge, but so much more pleasant an exit - with me holding her hand.

 

[Koolau]

And when dementia sets in, you’ll forget what it’s for.

Pick your advocate well. My mom chose..."wisely." She chose me. Her advocate knew when it was time and her PCP knew as well. Some transitions are not to be missed. A few tears and a wonderful life-time of memories all crowded into a few precious final moments.