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|Subject: Re: Long Term Care||Date: 3/28/2011 8:56 AM|
|Author: 2gifts||Number: 68746 of 81965|
ust as a S.W.A.G.: $5000/mo for Alzheimers ward (we paid $4000/mo in 3005 for my Mom). is $60K/yr. The delta is less than that, because some of the 5K is for food, etc. But even ignoring that...
I'm in MA where the average nursing home cost is about $200 per day, so that's $6000 per month now. Alzheimers patients can live for years [my step mother's first husband was in a nursing home for a good 10 years before he passed away], so that's $72k per year just for the patient care. What does the other spouse live on if they are only seeing $40k per year from their $1M nest egg that's supposed to last through their retirement?
But let's ignoring portfolio survival, and ignore growth, ignore earnings, say in this situation you'd hit the panic button and go to cash to ride out the storm.
A $1M portfolio where you take out 90K per year will last 11 years.
Exactly. So what does the surviving spouse live on after the first spouse has died? In my step-mother's case, she had to sell everything to afford her husband's care, and was allowed to keep the car and her own social security, but it essentially sent her to the poor house and left her with nothing from what they had saved over the years because it was needed for her husband's care. And they had nowhere near that $1M saved up.
At 45 years old, you'll pay premiums for 20 years just to get to 65, and perhaps another 10 years before need.
That's a long time in which to build up your own portfolio to self-insure LT care.
Let's say the total premium is $4k per year for both spouses [ours is less than that]. Over the 30 years you've used above, that's $120k paid over that time period. Assuming 8% rate of return over that period, that would be about $183k at the end of 30 years. At $72k per year for nursing home care, that would last long enough for one person to spend 2 1/2 years in a nursing home.
I guess different people view things differently. Some people hear about LTHI and start paying premiums. We heard about it and decided to aim for a $2M retirement portfolio.
Everyone plans differently for retirement, and has different targets. I'd have to work longer to save the extra needed to fully fund a nursing home for both of us. There are a few problems with that not the least of which is that I'd actually like to enjoy a few years of my retirement instead of spending longer in a nursing home with my golden years cut short if I end up with Alzheimers.
For us, I'd rather pay some money to insure for this than spend a bunch more years working.
But I've always wondered---what if you die early? Is any of the premium returned? According to the SSA, only 75% of 45 year olds are still alive at 70.
I wouldn't expect to get these premiums back. Do you get all your homeowners insurance back every year that the house doesn't burn down? What about your car insurance? Do you get that premium back if you never have an accident? And if you die early, then you're not paying those premiums for 30 years either. This point seems like a red herring to me.
I have to say that I am glad that I got the LTC policy. I can understand that it's not for everyone, but we can afford it, and I'd rather retire earlier than work longer to self-insure for this.
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