When you are envisioning your retirement, you are naturally going to think about the good times that lie ahead. To get there, you estimate your projected living expenses and take the right steps to be able to address them.
While you are doing so, you should make sure that you plan ahead with totally clear eyes. Though it is not the most pleasant subject to contemplate, you may need help with your activities of daily living eventually. With this in mind, we are going to share five key facts about Elder care planning in this post.
There is a life expectancy calculator on the Social Security Administration website. If you use it and plug in the numbers for a man that is 67 years of age, the life expectancy is 84.6 years. For a women of this age, it is 87.1 years.
People that were born in 1960 and any later year become eligible for Social Security when they are 67. When you put all of this together, you find that you are likely to live into your mid-to-late eighties if you are around long enough to collect your full Social Security benefit.
Assisted Living Likelihood
The United States Department of Health and Human Services tells us that 52 percent of seniors will incur long-term care expenses. This includes all types of professional living assistance, and 35 percent of elders will eventually reside in nursing homes.
The average length of stay for people that live in nursing facilities is one year. However, more than half of elderly people that need paid care receive the assistance for more than a year. A significant 13 percent need professional long-term care for more than 5 years.
Medicare Won’t Help
Medicare does not cover the care that in-home caregivers and nursing homes provide. It will pay for convalescent care after an injury or illness, but it does not extend to long-term custodial care.
Long-Term Care Costs
You are looking at some big numbers if you have to pay for long-term care out of your own pocket. According to the state, the average cost for a month of nursing home care in Connecticut is $13,863. Professional in-home care comes with a price tag of about $5,000 a month in our area.
When you are calculating the potential costs, you should double them if you are married. In addition, if you need care 10 or 20 years from now, these figures will probably be significantly higher.
Medicaid Can Provide the Solution
Fortunately, there is a solution in the form of Medicaid coverage. In Connecticut, there is a $1,600 limit on countable assets, but this is not necessarily a deal breaker. When you work with our firm, we can help you position your assets wisely with future eligibility in mind.
This is done through the utilization of an irrevocable, income only Medicaid trust, and here’s how it works. A lot of retired people rely on income that they receive through invested assets. When you establish the trust, you fund it with these income-producing resources.
You no longer control the principal when you take this step. However, you will receive distributions of the trust’s earnings. This will allow you to maintain your lifestyle without skipping a beat.
If and when you apply for Medicaid, the principal will not count. However, advance planning is the key to the successful execution of this strategy. There is a five-year look back period, so the trust must be funded at least five years before you submit your application.
We Are Here to Help!
Today is the day for action if you do not have a nursing home asset protection plan in place. We can gain an understanding of your position and your objectives and help you develop a plan that ideally suits your needs.
You can send us a message to request a consultation at our Glastonbury or Westport, CT estate planning offices, and you can alternately call us at 860-548-1000.
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