Money-Saving Strategies to Help Plan for Long-Term Care
Budgeting for a loved one’s long-term care can be a daunting task.
While many seniors have financial plans in place for retirement, through a personal savings account, 401(k), or pension plan, the cost of long-term care is often left out of these plans or the costs exceed their budget. As a result, many seniors end up needing specialized care when they don’t have the fund to cover the costs.
If a senior doesn’t have money saved away and they require long-term care, their loved ones might be left in a tight spot financially. Genworth Financial and CareScout conducted a survey finding that the national average cost for long-term care can range from $1,400 per month for adult day care services to almost $7,700 per month for a nursing home’s private room.
The odds that a family would not need to turn to some type of care assistance is not rare. According to the Department of Health and Human Services, almost 70% of adults over 65 years old will eventually need some type of long-term care.
Rather than taking risks, caregivers should begin working to save money for these long-term health care needs before it is needed.
What is Long-Term Care Insurance?
One of the best ways for you to plan ahead for your older loved one’s health support is to shop around for the best insurance plan. While Medicaid, Medicare, and private health insurance may cover some of the related costs, they typically don’t offer comprehensive medical coverage.
Long-term care insurance supplements these programs. When you need to use it, you will pay less money out of pocket. AARP explained that long-term care is not a medical expense which is why this care may lead to coverage gaps.
Some of these plans may also be pricey. There are many financial institutions that offer these programs, take the time to research several companies and the type of plans available, along with the pricing. This will ensure you can afford to comfortably pay the premiums each month and still receive the coverage your loved one needs.
It’s important to remember that the policy’s prices tend to increase as your loved one ages. If you’re interested in long-term care insurance, don’t several more years, while your loved one ages or develops serious health concerns. If a person is young and healthy person takes out this type of policy, the policy premiums will be significantly lower.
Tips for Saving Money for Long-Term Care
While a supplemental insurance policy may be helpful to some families, others find that it’s more cost effective than just paying for a long-term care plan themselves. If that’s the case in your family, you need to begin saving. That will help you have a safety net on standby.
There are various ways to start saving up for your loved one’s health care cost. Here are some that can get you started:
Create a dedicated account for long-term care
Set up a new account to cover potential health care costs. Whether you opt to open a personal savings account at the bank or invest, this fund should be set aside to cover the needs of your loved ones. This account should not be used for other purposes, you can’t be tempted to pull the funds out to use for other expenses. Because these funds are limited, you may need to have an accurate understanding of which services you can afford when you need it.
Stick to a contribution schedule
U.S. News & World Report states that you would be likely to save money if you start small, this makes the process easier. Create a schedule for adding money to the savings account that will help you achieve your goals. Whether you start by adding 5 percent of your paycheck or $10 per week, pick an amount that’s affordable. Add these funds to the long-term care fund and a timeline for when you add these contributions.
Many financial organizations allow you to use auto debit to take money from your checking account and deposit it directly into a savings account on schedule. After you feel comfortable with your ability to save, you can increase how much money you add each time.
You must be conscious of your spending
The more cautious you are on your spending, the more funds you’ll have available to save. Time.com says you don’t have to deprive yourself of luxuries when trying to save. However, you need to be careful of the purchases you make.
You should use coupons, discounts, compare various brands, and consider which products and upgrades are truly needed when shopping. By being cautious, you won’t end up spending more money than necessary. You should examine the type of purchases you make and decide which are perks and which are necessities. You may find that there are routine expenditures you follow out of habit and not out of a regular, actual need.
If you need help deciding on the type of account you need to set up long-term care or the best way to save money, reach out to a financial advisor. A financial advisor can help create a system that works for you. Whichever way you decide to save, planning can take the stress out of long-term care that offers the best benefit to you and your loved one.