Planning for Retirement with Increasing Longevity

People are living longer than ever due to advances in medical care and technology, eating a better diet, as well as exercising more frequently. Increased longevity changes our view of both asset protection and retirement planning.

Women are statistically at a higher risk for needing long-term care outside the home than men. Men are still at high risk; it’s just that most men are taken care of by their spouse in their home.  Today, 80% of men die married; 70% of men who need long-term care will be cared for by their spouse and will die at home. Only 30% of men will ever enter a long-term care facility. In contrast, 80% of women die unmarried, and over half of the women in the U.S. will live to age 90 or older. Longer life expectancies mean that these statistics are going to get worse over time, causing concerns as to whether current retirement ages and savings plans will remain feasible for future for retirement and long-term care needs.  Seniors justifiably fear running out of money and that risk is increasing each year; don’t let the one thing your children inherit from you be you.

Our clients are often shocked at the high costs of long-term care. In Raleigh, assisted living facility care costs range from $2,000-7,000 per month. Nursing facility care exceeds $6,500 per month (excluding aggressive rehab or other specialized facilities that cost more). Health insurance does not cover these costs, so families often pay $150,000-400,000 out of pocket. Today’s increased longevity will make these estimates even more frightening over time. Luckily, Medicaid and N. C. Special Assistance are two public assistance programs that can help pay for the cost of long-term care.  Veterans Pension is another long term care reimbursement program for War Period Veterans and their spouses and widows.

Younger generations should also be concerned about increased longevity and the high costs of long term care, as approximately 10% of the babies born today will live to age 121. Young people should be saving 6-10% of every paycheck for retirement. A Roth IRA is a good investment choice (if you can afford to contribute $5,500 annually), as the best time to contribute to this plan is at the beginning of your career when your tax rate is low. Young people will be at the greatest risk of running out of money in retirement and most will need to work longer than their parents before they can retire in comfort.  Many young people will need the right kind of financial assistance from their parents and grandparents to maintain a reasonable standard of living in retirement.  Putting aside money from the beginning for retirement is far more important in the long run than any educational savings plan.  But Seniors must be careful how and when gifts are made in order to protect themselves for their own future needs.  Eldercare planning is a must for every senior.

If you or your loved ones need assistance planning for retirement or have questions about Medicaid, Special Assistance or Veterans Pension as ways to cover the cost of your long-term care, be sure to contact an experienced Elder Law attorney. Call W.G. Alexander & Associates today!

Attorney Bill Alexander discusses these issues and more every Tuesday morning on W.G. Alexander & Associates’ radio program, “Asset Protection Today,” on TalkRadio 850 WPTK (AM). Be sure to listen tomorrow  from 9:00-10:00 AM.  To listen to last week’s show, please visit WPTF’s on demand show blog by clicking here.