If you or your spouse were to need long-term care assistance today, which of your assets would you liquidate first?

This isn’t a trick question. According to the U.S. Department of Health and Human Services, the average rate for a private room in a nursing home within the state of Texas is just under $5,000 per month. Think sharing a room would be cheap? Try an average of over $3,600 per month. Oh, and don’t forget to figure in expenses for the remaining spouse as caretaker: his or her bills, food, clothing, travel, etc. – in other words, just add the amount for long-term care to your current monthly budget and consider the question again: If you or your spouse were to need long-term care assistance today, which of your assets would you liquidate first?

Think this won’t happen to you? A recent study by the New England Journal of Medicine found that for a couple over age 65, there’s a 50-50 chance at least one of them will spend a year or more in a nursing home. No one wants to consider the possibility of needing long-term care. It’s not how we expect or plan for things to happen, but as Americans we are living longer. I would ask you to consider the question again, but I suppose you get the point.

If you haven’t funded a long-term care plan yet, I bet I can guess why. There are typically three reasons. The first of which, we just talked about: “It won’t happen to me.” The second is the “use it or lose it” thought. The third is simply the price.

So let’s discuss some creative solutions for the latter two reasons.

First, there is always self-funding. Some individuals set aside a specific amount in an annuity, IRA or CD to cover these costs. The primary risk, however, is falling short financially if there is a longer than expected need for long-term care services for you and/ or your spouse.

Another potential solution is a hybrid long-term care plan. These plans can be implemented with a few strategies:

• Long-Term Care Insurance/Annuity-if long-term care is never needed, your named beneficiaries receive the balance of the cash accumulated fund. Incidentally, this type of long-term care insurance often accepts individuals that most policies would not due to health or family history. Some of the riders available for this type of plan are life-time coverage and inflation protection.
• Long-Term Care Insurance/Whole Life Insurance-in this plan, long-term care benefits would be paid out of your policy’s death benefit. If you don’t use the death benefit or all of the death benefit, the remainder would be paid to your beneficiaries. Some of the riders available for this type of plan are also life-time coverage and inflation protection.
• Annuity/ Long-Term Care Rider-if you qualify for long-term care coverage, your income benefit will increase or even double. Even better, this one is extremely easy to qualify for; but be aware that you often have to have the policy in place 2 to 5 years in advance of qualifying for these benefits.

One of my favorite sayings is, You don’t know what you don’t know. We can never predict our fate. But the thing we can do is plan for the unexpected, and today you know a little more about what you don’t know.

For more information regarding long-term care plans, visit our website at www.kennedy-financial.com or call to set up a free consultation at 254.629.3863/ 800.588.6381.

Securities & Advisory Services offered through VSR Financial Services, Inc., a Registered Investment Adviser and Member FINRA/SIPC. Kennedy Financial Services is independent of VSR Financial Services, Inc. VSR does not provide tax or legal advice.