LDAwealth managementChad Olivier, CFP ®Wealth Consultant/LPL Branch Manager, The Olivier Group, L.L.C.It is not surprising that with all of the recent advancementsin modern medicine we are living longer. However, whatquality of life are we having in our later years? Just likewith a business, in life you need to plan ahead and preparefor any devastating outcomes. In a study done by theAmerica <strong>Association</strong> of Retired Persons (AARP), the lifetimeprobability of becoming disabled in at least two activities ofdaily living or of being cognitively impaired is 68 percentfor people age 65 and older (<strong>Be</strong>yond 50.03: A Report to theNation on Independent Living and Disability).What does this mean? Most people will need some typeof long-term care after the age of 65. Long-term care isdefined as personal care and assistance that an individualmight receive on a long-term basis because of a disabilityor chronic illness that limits his or her ability to function.You need to be ready to care for aging family members andhave a plan in place for yourself. Many people assume thatMedicare will pay for assisted living care or home healthnurses, but this is not the case. There are three basic waysto pay for long-term care:1. Self Insure: use your current assets to pay for allcare-giving expenses.2. Long-term Care Insurance3. Medicaid: This is the least desirable way to fund longtermcare assistance. To be eligible you must have lessthan $3,000 of assets as a couple not including yourhome, any life insurance must have a cash value ofless than $1,500, and you can only have up to $1,500in funds designated for burial expenses. You will be award of the government and will have limited choices.The first two are the most advantageous ways to pay forpremium long-term care service. Yes, I said premium. The68 percent of us that will need these services should striveto receive the best care available. In <strong>Louisiana</strong>, prepareto pay between $45,000 and $60,000 for assisted livingcare. If you plan on funding the cost with current assetsmake sure your assets can withstand the financial burden.A reasonable distribution rate in retirement might bebetween three and four percent of assets. This means thatin order to fund a $50,000 assisted living care facility yourassets should be more than $1.5 million. If you and yourspouse are living off of your current nest egg then you willneed additional assets to fund your lifestyle.Who Needs Long-Term Care Insurance?The last alternative is to have a long-term care insurancepolicy covering part or all of the expenses. Consider thefollowing when looking for a long-term care insurance policy: insurance company you are considering? Is thecompany easy to work with and do they pay theirclaims? set up the policy with a term pay. This will allowyou to pay the premiums for a fixed period, suchas 10 years, and then you are covered. If you havean unlimited pay term the insurance company canraise rates throughout your lifetime. So as the babyboomers get older and the insurance companies arepaying more and more claims they can start raisingthe premiums for all of the lifetime pays. offer many different choices with the inflation rider.Things are getting more expensive and so will thecost of long-term care services over the years. Soanticipate this and have your benefit go up withinflation. If you need long-term care services, you will needthem for a while.The average stay in a nursinghome is 2.5 years. So if you choose a 90 day waitingperiod to receive your insurance benefits yourpremium will be less. Make sure you have sufficientassets to cover you for those first 90 days of longtermcare services.Decide how to pay for potential long-term care expensesnow or one day someone will make that choice for you.Chad Olivier is author of “What Medical School Did Not Teach You about FinancialPlanning” and owner of the firm The Olivier Group, LLC in Baton Rouge, La., whichspecializes in retirement planning and wealth management for physicians, dentists andother affluent individuals and families. If you have any questions about this article or futuretopic suggestions, please call (888) 465-2112 or visit us on the web at www.oliviergroup.com. Securities and Financial Planning are offered through LPL Financial Member FINRA/SIPC. Please note that the above article is for informational purposes only, and is The OlivierGroup is not endorsed by the LDA. Financial planning requires detailed individualizedanalysis of each person’s specific situation.CFP®, Certified Financial Planner and are certification marksowned by Certified Financial Planner Board of Standards Inc.34 LDA Journal
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