Issue link: https://viewer.e-digitaledition.com/i/334922
WE S P E N D Y E A R S WORKING at our jobs, diligently setting aside a portion of our pay into retirement savings accounts. The plan is to retire a little earlier and live a little longer than the average person, and not to run out of money in the process! The biggest threat against this plan is not a stock market "correction" or higher taxes, but rather a long-term care event that might happen to you or your spouse early in retirement. These potential costs could easily exceed half a million dollars if care is needed for several years. The worst-case scenario is Alzheimer's disease or dementia, for which care can be needed for five, 10 or even 15 years. Do you have retirement income insurance that will pay for the necessary care so your retirement assets will stay intact for the "healthy" spouse? Long-term care insurance was designed for this exact purpose. It is structured to reimburse for the cost of care received when an individual experiences an event that lasts typically longer than three months. This care can be received at home, in a community setting or in a nursing home facility, but it must be provided by a licensed and skilled individual who is affiliated with an agency or business that can generate a bill for services (reimbursement-based policies). To be eligible for benefits, insured individuals must be able to prove they have a severe cognitive impairment (Alzheimer's disease or dementia) so they can't be left alone, or they need standby assistance with two or more activities of daily living (ADLs). There are six ADLs — dressing, bathing, transferring, toileting, eating and continence. Herein lies the rub — most people do not want to face the fact that this may happen to them. It is not an easy thing to discuss or plan for, and it sometimes can cause people to ignore reality. Unfortunately, odds are pretty good it may happen. A couple entering retirement has a 50 percent chance of one spouse experiencing a long- term care event lasting longer than three months. Many advisers recommend long- term care insurance to protect retirement assets against such an event. These policies provide a firewall around retirement assets so that the healthy spouse does not run out of money. As with most insurance policies you buy, there is a chance you may never need it. If you never collected on your homeowner's policy during the time you lived in your house, it doesn't mean the policy was a waste of money. Insurance provides peace of mind and assurance that if the unthink- able happens, you and your family will be protected. Some people feel they can "self-insure" the potential costs of a long- term care event because they have several million in retirement assets and reserves. On paper, they may be right — there may be A Wise Investment? Retirement Income Insurance: By Peter L. Derrenbacker, CLU, ChFC, CFP ++++++++++++++++++++++++++ + +++ + +++ ++++++++++++++++++++++++++ BENEFIT SPECIALISTS 2 0 | Central New York MD NEWS ■ M D N E W S . CO M