A longer retirement increases the odds of needing long-term care. An AARP study found more than 70% of nursing home residents were women, says Kiplinger’s recent article entitled “A Woman’s Guide to Long-Term Care.”
Living longer also increases the chances of living it alone because living longer may mean outliving a spouse. According to the Joint Center for Housing Studies of Harvard University, “In 2018, women comprised 74% of solo households age 80 and over.”
The first step is to review your retirement projections. It’s wise to look at “what-if” scenarios: What-if the spouse passes early? How does that impact their retirement? What if a female client lives to 100? Will she have enough to live on? What if a single woman needs long-term care for dementia? Alzheimer’s and dementia can last for years, eating up a retiree’s nest egg.
Planning for long-term care. If a woman has a healthy retirement income and savings, she may want to self-insure her future long-term care expenses. This can mean setting up a designated long-term care investment account solely to be used for future long-term care expenses. If a woman has a modest degree of retirement savings, she may want to lower her current expenses to save more for the future. She may also want to look at long-term care insurance.
Social Security. Women can also think about waiting to claim Social Security until age 70. If women live longer, the extra benefits accrued by waiting can help with long-term care. Women with a higher-earning spouse may want to ask the higher-earning spouse to delay until age 70, if possible. When the higher-earning spouse dies, the widow can step into the higher benefit. The average break-even age is generally around 77-83 for Social Security. If an individual can live longer than 83, the more dollars and sense it makes to delay collecting until age 70.
Medicare. Many people mistakenly think that Medicare will cover long-term nursing home care. Medicare has only limited benefits for short term recovery after a hospitalization. It does not pay for long-term care. Another mistake is not re-evaluating your Medicare plan(s) each year during open enrollment. Providers move in and out of networks and drug plans change the prescription medications they cover. Choosing the right plan can save hundreds of dollars a month.
Medicaid. In Texas, Medicaid pays for long-term care in a Nursing Home, when strict medical and financial qualifications are met. Married couples have an advantage in meeting the financial qualifications for Nursing Home Medicaid since much of the couple’s assets can be protected for the “healthy” spouse. This planning requires the assistance of an experienced Elder Law Attorney. Medicaid coverage in Texas for Assisted Living or in-home care is very limited, often with waiting lists of over a year.
Estate Planning. Having a comprehensive estate plan is a must. Women (and men) should have an Agent authorized to act on their behalf through a power of attorney (POA). A POA gives a trusted agent the ability to write checks and send money to pay for long-term care.
Contact our office to set your estate in order so you are prepared to handle rising long-term care costs.
Reference: Kiplinger (July 11, 2021) “A Woman’s Guide to Long-Term Care”