The pandemic has caused us to come to terms with the unexpected. More people have been spurred to update vital documents such as wills, powers of attorney, and living wills—opening up the conversation to an often-overlooked topic: long-term care (LTC).
It may be difficult to imagine needing 24/7 care at some point, says Amanda Harms, senior vice president and trust advisor for Truist Wealth. That’s why it’s helpful to talk with your financial advisor before broaching the topic with family. “No matter what long-term care plan you choose,” she says, “it’s my job as your advisor to help you figure out what’s important to you and how to get there.”
For Harms, the biggest hurdle is often convincing clients that they need a plan. For this, she turns to Genworth’s Cost of Care Trends & Insights data, which has been tracking LTC stats for almost two decades. According to Genworth.com, 70% of people over the age of 65 will need LTC support at some point, and the likelihood increases with age. The cost of a room in a nursing home has risen 62% since 2004 and is being driven higher by pandemic issues like rising demand, labor shortages, and regulatory changes for care facilities. In terms of dollars, a private room in a nursing home ran about $106,000 for the year 2020, but if you consider what that money could have made if invested, the net cost becomes even greater.
It’s not (just) a matter of money
Harms notes that most of her clients still choose to self-fund LTC, but Kristin Beard, regional director of Advice and Planning for Truist Wealth, asserts that finances aren’t always the most important part of this conversation. “Money isn’t what most people talk about,” she says, when she asks them, “If you’re going to need long-term care, what do you want that to look like?”
“People’s concerns really revolve around three things: choice, dignity, and control—and the intersection of these,” she says. “That’s the richest part of the conversation around planning, not the break-even.”
Here’s how each of these categories can guide your planning.
1 Choice: Keep your options open
There are more choices to make than you might think (see sidebar). “When you’re facing an emergency, expediency takes precedence over rationality,” says Beard. And the sooner you start planning, the more options you’ll have. Many companies now offer hybrid plans, such as a universal life insurance policy with an LTC rider—which pays out unused LTC funds as a death benefit—but these are costlier as you age. Your financial advisor can help you explore levels and types of care, as well as how you’ll pay.
2 Dignity: Make your own decisions
When you’ve spent your whole life being independent—and having others depend on you—it can be difficult to let go of the reins. Long-term care planning allows you to make your own decisions in advance, so you’re not relying on someone else. It also allows you to control the dignity with which you are treated when you need care. Documents outlining your long-term care plan can help ensure your wishes will be met.
3 Control: Know what you’re willing to give up
Being in a long-term care facility has always involved giving up some measure of control, but that has been magnified over the past two years. Now, concerns like “Will I be safe? Can I have visitors?” are right up there with “How nice are the rooms and grounds?” Making your own choices and conveying them to family can also help prevent family from squabbling over what you “might” have preferred.
Location questions to consider
There are many layers to long-term care discussions. Here are a few issues related to the question of where you want to receive care:
- Do I prefer in-home care, assisted living, or a private room?
- Do I want to be able to room with my spouse if we need different levels of care?
- How close do I want to be to my family? Am I willing to move?
- What services do I need to maintain a sense of home or community?
These are just a few things you can cover in long-term care planning with your financial advisor.
Get the conversation started
Harms says that it’s wise to review LTC plans as part of your yearly portfolio review. That means sharing information on anything that can impact future needs, such as how long your grandparents lived, what conditions run in the family, and how your health is today. Then, if you’d like, your advisor can refer you to a licensed insurance agent for quotes on various options. “We can run the numbers and see what makes sense for you,” says Harms.
Once you have a plan in place, share it with your family, she adds. “The sooner you do, the better they’ll be able to respect and go along with the plans you put into place.”
Ask your advisor about Truist’s ‘Survivor’s Guide,’ a comprehensive tool to help you navigate after the loss of a loved one.