Protecting Yourself When Government Won't

05/04/2009 9:54 am EST

Focus: MARKETS

Terry Savage

Author, The Savage Truth on Money

Judging from the responses to the past several postings about the problems with Social Security and Medicare, you're not willing to rely only on those programs for your retirement lifestyle. Maybe, even after the stock market crash, you expect you'll have enough savings to live in reasonable retirement style.

But what about the most costly and least planned-for possibility-the scary thought that one day you'll need some form of nursing care to do even the most basic tasks of daily living? Medicare doesn't cover that-and neither do Medicare supplements. You'll get a limited number of days in a skilled nursing facility after you've been hospitalized. But those programs don't cover extended "custodial care."

Only after you've used up almost all your assets and income, will state Medicaid programs step in to provide care. And almost all of that care is given in state-funded nursing homes-which are growing more underfunded in every state as the recession cuts tax revenues. What will those nursing homes be like when boomers retire? Believe me, none of us want to find out.

Don't want to think about it because you're too young to worry about this? Well what about your mother, or father? Are you willing to interrupt your life to give them daily care?  Do you think they could afford a private nursing facility-currently costing nearly $80,000 a year in major cities?  Will you allow them to give you their assets so they can "qualify" for a state-funded facility? Could you sleep at night contemplating that?

There's a better solution: Long-term care insurance. It give you the choice of in-home care, assisted living facilities, or private nursing homes. All are a far better choice than believing that the state will provide care. And adult kids can get together to pay the premiums-a great Mother's Day or Father's Day present! (Buy for both, and you'll get a substantial discount.)

I can hear your objections already:

It's expensive. Yes-but not nearly as expensive as one year in a nursing home.

I might not need it. According to the Department of Health and Human Services, 70% of people over age 65 will need some form of care.

I don't trust the insurance companies. Stick with the larger companies (get ratings at www.aaltci.org/ratings) that have the most experience in this industry. The greater risk is in not having insurance.

Still not convinced? If you're thinking about health care these days, just remember the odds of getting swine flu are a lot longer than needing custodial care in your old age. Think of LTC insurance as the vaccination you can't get for swine flu! Or a way to protect yourself and your family if you don't want to rely on the government.

What do you think? Please have your say and join the conversation.

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