Retirement Planning: The Imperfect Storm

This is an article from The Vermillion Law Firm, LLC (https://www.vermillionlawfirm.com/) in Dallas, Texas, that we thought others may find helpful.

You may have gotten your first introduction to retirement planning when you secured your first career position. Many companies offer 401k plans and in many cases they will match employee contributions up to a certain amount. As you examine the paperwork, you may do the math and envision how much you may have in the account when you reach your senior years.

When you are picturing your retirement years, you may think about things like travel, golf, and taking care of your bucket list item by item. All of these things things can be a great deal of fun as long as you have the financial resources that you need to bring your retirement vision to reality.

Unfortunately, there is another facet to take into consideration and it can be somewhat disturbing when you understand the facts. These active retirement years are often referred to as the golden years, but there is another period of time that will follow called the twilight years. You may be faced with significant expenses during this final period of your life.

Three Inconvenient Realities

There are three inconvenient realities that coalesce into the imperfect storm when it comes to the latter stages of your life. One of them is the fact that the majority of senior citizens will need living assistance at some point in time. According to the United States Department of Health and Human Services, the figure is an attention-getting 70 percent, so it is likely that you will need help with your activities of daily living.

The second part of the storm is the matter of cost. Nursing homes and assisted living communities are extremely expensive and seniors often spend multiple years residing in these facilities. If you have to reside in a nursing home for two years or more (ten percent of residents do remain in the facilities for at least five years) it can get pretty expensive.

Here is the final piece of bad news: Medicare does not pay for long-term care. The program will pay for convalescent care after an injury or illness, but it does not pay for custodial care, which is the type of care that you will receive if you need help with daily activities.

Nursing Home Asset Protection

Now that you have an understanding of the situation that many seniors face, you may wonder if there are any solutions. In fact, there are ways that you can prepare yourself for long-term care costs in advance so that you can protect your assets for the benefit of your loved ones.

Medicaid is a government program that does pay for long-term care and it pays for the majority of the care that seniors are receiving. However, because it is a need-based program, you have to position your assets strategically if you want to qualify for coverage and advance planning is a necessity.