Tuesday, November 22nd, 2011 | | |
Two months before my wedding, my soon-to-be husband got a call from an emergency room near his mother. She’d come in with bad flu symptoms, and they wanted us to pick her up and take her home so she wouldn’t have to drive herself. When we arrived, it was immediately clear to us that she was completely mentally altered and a simple flu couldn’t be the explanation. After much insistence and fuss-raising, we got her evaluated by a neurologist. She had one of the worst cases of viral encephalitis the doctor had ever seen.
By the time our wedding arrived, she was in rehab recovering. The brain injury caused by her encephalitis, sadly, escalated her next big health crisis: Alzheimer’s. During the next 10 years, my husband slowly began taking over most of her care and managing her finances until we had to finally put her into a facility that could care for her escalating needs.
During those times, one thing that helped us immensely was rather unexpected. It turned out that many years earlier—right after her husband passed away—my mother-in-law purchased a very, very good long-term care insurance policy. This enabled her to have a home-care aid for several years, and helped in placing her in a better quality home when it came time. It was a tremendous boon to our family.
This was never clearer than this past January when it was my turn; I got a call from my mother’s doctor saying she was in for an appointment and clearly had some sort of very severe pneumonia. My mother was suffering from a profound hypoxia (lack of oxygen to the brain) that was causing her to be combative and mentally altered, and she was resisting going to the hospital.
After a 10-day medically induced coma, two months of rehab, and six months of my mother being out of work, my husband and I nearly lost our house trying to keep her (and us) afloat financially. My mother has zero long-term care insurance, no disability insurance (she’s an adjunct professor), and little in the way of savings. Eventually we addressed the problem by triggering my mom’s Social Security early and having her move in with us. We’re adjusting to being a family of four now; secretly I think my daughter loves having her Grandma around all the time. I do, too—mostly. We clash a little during TV time at night. But we’ll survive.
The contrast between the two scenarios is stark, and it’s all because my mother-in-law was smart and purchased long-term care insurance early; she was in her late 40s. We’ve brought the subject up with my mom, but we’ve met some resistance; she thinks long-term care insurance equals nursing home. We’re trying to correct that misconception; long-term insurance would actually make it much easier to keep her at home, after all. At 43 now myself, it’s also something my husband and I have on our “list” when our finances recover this year.
Thursday, November 17th, 2011 | | |
During open enrollment at work, we’re faced with the often confusing task of evaluating the benefits options our employers offer. Often, these benefits can change from year-to-year, complicating things even more. While you may be tempted to just let your previous benefits selections “roll over,” it’s critical to take time to review and understand what’s being offered and make any necessary updates to your insurance and other plan selections to meet the changes you have—or will have—in your life.
According to a recent survey conducted by LIFE and LIMRA, among the top financial concerns of Americans today are
- having enough money for a comfortable retirement
- paying for medical expenses
- being able to support themselves if they become disabled and unable to work
Open enrollment gives you the perfect opportunity to review your financial and insurance plans to make sure you have a foundation in place to help prepare for these types of potential expenses. These eight tips will give you a helping hand:
1. Choose your options carefully. Barring a major life change, such as marriage, divorce or the birth of a child, most benefit plans do not allow you to make changes to your coverage elections more than once a year, during open enrollment season. Be sure to consider your plan options carefully so that the choices you make meet your current needs.
2. Don’t assume that doing nothing will maintain your status quo. Allowing your benefits options to just roll over from one year to the next can seem like an easy decision when you’re faced with numerous open enrollment choices. But not taking the initiative to evaluate new or changing options could mean missing out on plans that could potentially save you money or could leave you in a program that no longer meets your needs.
3. Consider a high deductible health plan. Review your health plan options to see if your employer offers a high deductible health plan. These plans can be less expensive if you don’t plan to use your coverage often. However, you’ll want to take the money from your lower premiums and save it. If you should incur medical expenses, you may need that money to pay for them because you will have to pay a larger deductible up front. If you don’t have high medical expenses, you will have saved that money.
4. Look for cost-effective ways to increase your life and/or disability insurance. Many companies offer their employees group life and disability insurance. Sometimes employers will provide a basic life or disability insurance benefit at no cost to their employees. They may also offer an option to supplement coverage through a voluntary payroll deduction. It is important to review the options available to you to maximize any opportunities where you may be able to increase coverage in a cost-effective way.
5. Re-evaluate the amount of insurance coverage you need. If you’ve recently had a child or been married or divorced, it is important to update your insurance policies to account for these life changes. When the number of people who depend on you changes, it’s likely that your health, life and disability insurance coverage will also need to change. The LIFE website offers several calculators, including a Life Insurance Needs Calculator and a Disability Insurance Needs Calculator, to help you determine how much coverage you should have.
6. Make sure your beneficiary information is up to date. Marriages, divorces, births or adoptions can often be overlooked when people are reviewing their policies and the beneficiaries designated for things like life insurance or a 401(k) account. You’ll want to be sure that your beneficiary information is updated based on your current life situation to avoid any confusion or potential problems during the claims process.
7. Calculate your out-of-pocket healthcare expenses. As health-care costs continue to rise, it’s important to consider taking advantage of a flexible spending account (FSA) or health saving account (HSA). These types of accounts allow you to set aside a portion of your pre-tax earnings to pay for qualified expenses, such as doctor co-pays, prescriptions, daycare or even mass transportation and parking—depending on the type of account being offered. If you currently contribute to a FSA or HSA, you may want to increase or decrease your contribution based on your current needs.
8. Ask for help. Talk to your human resources representative or your company’s employee benefits advisor about your benefits options during open enrollment. You’ll also want to review your options with your spouse—some benefits packages are better than others, so you may want to consider being added to your spouse’s plan as a dependent or vice versa.
Tuesday, November 15th, 2011 | | |
When I insisted on having my dad, at 83, move in with my husband and me, you could have said I was an idealist or being overprotective, or that I was biting off more than I could chew.
At the time I would have argued with you vehemently, but you would have been right!
Based on my commitment to my dad, my sense of duty and my own idea of what to expect in my new role as a caregiver (and little actual research or planning), in my mind I was prepared.
“It won’t be a problem,” I reassured my husband. Dad’s cool—no Alzheimer’s, he takes care of himself and does well getting around the house. Sure, he needed some limited help to live on his own, but he was still the active and robust dad that I had known my entire life.
I can now tell you—complete with battle scars and learn-as-you-go frustrations—how quickly I learned how significantly a family is impacted when they are not fully prepared to provide care. I didn’t know that:
- You can’t take vacations without live-in assistance ($20 hour). In my case, Dad refused to go to a short-term nursing facility and I felt guilty.
- My dad’s senile dementia, though not very perceptible initially, would deteriorate and trap us so we could not go out to the store or anywhere for more than a few hours for fear he would decide to cook or walk down the street alone—neither of which he could do without hurting himself.
- Numerous and inevitable health issues would pop up with more frequency, causing me to miss critical work time.
- My husband’s dream of building a restaurant for retirement income would fall to the wayside because it would cost more and more to support my dad while we both worked extensive hours.
- The issue of dealing with memory loss and associated combative behavior would cause fights, arguments and guilt.
- The progressive need for care would create a need for more skilled “sitters” if my husband and I succeeded in getting away for a few days. Such care was needed for prevention of bed sores, maintenance of feeding tubes, and monitoring of questionable continence.
My dad lived to be 90 years old and was near the end of his retirement savings when he passed away. I kept my promise to have him stay with us for as long as he was able, but I paid a bigger price than I could have imagined all those years ago when I made that promise. I’m more convinced than ever that planning for my own later years with tools like long-term care insurance is a must for me and my family.
While you can’t plan for everything, long-term care insurance would have helped eliminate unnecessary stress and certain unknowns for me while I was caring for my dad. Simply put, it provides caregiving options that ensure you or your family members receive the care you need without depleting your savings.
Long-term care insurance ensures that families don’t have to assume the numerous demands of caregiving alone. In addition to custodial care at a nursing home or assisted living facility, most long-term care insurance plans cover adult day care services and home care that can give family caregivers a much-needed (and well-deserved!) break from their caregiving responsibilities. Some plans also have flexible options that will cover care provided by friends or family members, training for informal caregivers, home modifications and medical equipment.
Not everyone likes to talk about getting older and planning for our later years. It can be a very emotional subject. But finding a simple, worry-free solution will give you peace of mind knowing that your financial security is protected and you receive the care you need.
I encourage you to use Long-Term Care Awareness Month as an opportunity to learn more about the resources and products available to plan for your future long-term care needs and begin this important discussion with your loved ones.
Thursday, November 10th, 2011 | | |
Donna was fortunate to follow in her sister’s footsteps. Her older sister had purchased a long-term care insurance policy, and although Donna was only 56, she thought getting the coverage was a good idea, too.
She also had experience with it. Her ailing aunt had made great use of her long-term care insurance policy, but because she had bought it at an advanced age—in her 80s, her premiums had been high.
Getting long-term care insurance at a younger age felt like a smart financial move, and it also helped put Donna’s mind at ease, given that she lived alone. She got a policy that provided a daily cash benefit, which meant that it would cover family and friends providing care for her at home if it were ever needed.
Little did she know that even before reaching retirement she would be tapping into her long-term care insurance benefit.
Donna went into the hospital for a partial knee replacement and came out of surgery with a fractured tibia. The doctors knew something more serious was wrong. In fact, Donna was later diagnosed with Turner Syndrome, which is a degenerative disease of the bones.
She was able to continue to work as a registered nurse, but no longer as a bedside nurse. She took intermittent time off for several additional surgeries and to recuperate from illnesses related to her disease. Her long-term care insurance benefit helped pay for care while she was on sick leave, and continued for a few months after she returned to work to cover ongoing therapies and transportation. She says it was of “tremendous help financially.”
Eventually her illness took its toll, and Donna found herself unable to continue working. She now relies on her long-term care benefit more and more as her disease progresses. Of comfort to her is the fact that while family and friends continue to help her out, she is able to pay them for their time, effort and gas, thanks to her long-term care insurance benefit. “I honestly don’t know what I would have done without this benefit,” she says.
In addition, now that Donna is receiving benefits from her policy, she does not have to pay the premium for it, due to an additional rider she had in place.
Donna could not have known at age 56 how much she would be relying on her long-term care insurance. And if she had waited until her 60s to buy it, it would have been too late. That’s the catch—you can’t buy coverage after you find out you need it.
We may not all have an older sister to rely on for good advice, but we can all tap into the expertise of a knowledgeable financial advisor. Don’t hesitate to bring up your concerns about how you will pay for long-term care. As Donna says, “You can’t afford to go without long-term care insurance.”
Tuesday, November 8th, 2011 | | |
“When asked to react to several state-of-the-economy statements, 27% of nonretirees said the safest place right now for any money left over after paying expenses is ‘under my mattress.’”
This is what Linda Koco, contributing editor of AnnuityNews, wrote in the article Annuities Vie With Mattress Money, based on an Allianz study on the use of annuities for retirement savings. She found that the tough economy is causing consumers to make some tough retirement savings choices between annuities, other retirement plans, investments and mattress money, according to survey findings.
When the study participants were asked to rate several factors related to creating a more secure retirement, 86 percent said “having a guaranteed stream of income in retirement.” And nearly half (47 percent) of non-retirees rated a guaranteed stream of income as the top retirement need they have yet to acquire in order to feel more secure.
What they are describing are the benefits of an annuity: guaranteed retirement income. However, only 8% of nonretirees said they own annuities, according to the study.
The survey results confirmed that Americans want more guarantees in retirement but simply don’t know what to do to create financial certainty. The takeaway here is that more education is clearly needed about annuities.
Additional numbers from the Allianz study show a startling retirement landscape.
- Only 18% have guarantees through a pension.
- Almost 40% of non-retired Americans indicate they own no retirement or investment products of any kind.
- 30 percent of nonretirees say they have either decreased the amount they are saving for retirement or have stopped saving altogether.
- 26 percent say they still have no idea what they need to acquire in order to feel their retirement will be secure.
- 28 percent said, “I wish I were more heavily invested in annuities than I am now.”
- 51 percent said the stock market’s recent volatility has now made them question whether retirement savings vehicles such as 401k, 403b, or 457 plans are adequate ways to save for retirement.
The bottom line: If you want a safe, secure guaranteed lifetime income in retirement, use annuities in your planning.
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