June 2000
Elder Law: Plan Now for Your Long-Term Care

At what age is it appropriate to begin planning for one’s retirement? Should one begin at age 21? Or at age 35? What about age 40 or 50? Equally important and the subject of this column, at what age should you begin to plan for your own long-term care? There is no clear or easy answer to this question. Nor is it necessarily the same age for everyone.

In an earlier column, I discussed trends occurring in our aging society: “Despite our independent spirit, there will likely come a time when we will become dependent on our children or others for our daily care. Alternatively, we may eventually reside in a retirement or assisted living community, or, we may someday be forced to live in a nursing home.”

Given the smaller size of our families, the changes in our life styles, and our every increasing mobility, it is less likely that our children will be able or willing to care for us. Many of our children now live out of the state and are engaged in pursuing their careers. Or, they may themselves have financial and physical problems which would make it nearly impossible for them to care for us. In effect, we need to make our own plans for our long-term care.

There are many factors to consider in formulating a long-term care plan. First, and perhaps most obvious, is an assessment of our personal financial resources. What retirement income will we have? How much will my IRA or my 401(k) provide in monthly income? Do I have a pension or will I have one available to me? Do I own a home, and if so, should I sell it and purchase a smaller home or a condominium? Are there any tax consequences related to these financial considerations? There are many more financial issues to consider, but these are some of the major and more obvious ones.

A second category of factors to consider relates to your willingness to change your living conditions and style. You may be inflexible about living anywhere but your existing home where you have perhaps lived for decades. Or, you may not object to moving to a retirement community. How about living with one of your children? These are very personal questions that you must answer before you can develop a long-term care plan for yourself.

A couple of examples may help you begin. Assume that your income is more than sufficient to meet your regular monthly expenses at this time. If so, how much more could you put toward (1) savings; (2) an IRA; (3) a 401(k) Plan; (4) paying down or paying off your debts sooner than otherwise; and (5) purchasing long-term care insurance. Each of these options will likely help you have more choices as you plan for your long-term care.

If you want to preserve as much of your estate as possible (perhaps for your children), long-term care insurance may be the best option for you. Such plans have become more plentiful and affordable in the past few years. If you are in your fifties, you may be able to purchase such insurance for you and your spouse for less than $300 per month.

But what if you are barely getting by on your present income? What can you do? Your options will of course be more limited than if your income were higher. However, you can still evaluate what alternatives you have. For instance, suppose you own your home but you have very little in the way of liquid assets such as savings or retirement accounts. You can use the equity in your home to increase your long-term monthly income through a reverse mortgage; or, you could sell your home and rent. The proceeds from the sale of your home can be used to purchase a life-time annuity with guaranteed monthly payments to you.

Whatever you do and whenever you do it, you should begin as early as possible to begin the process of thinking about your long-term care. The more you plan and prepare for it, the greater the quality of care you will enjoy—whether that care is in your own home, in a child’s home, or in an institution.

It is best to consult with an Elder Law Attorney or an attorney concentrating in estate planning. If needed, check with the National Academy of Elder Law Attorneys at (520) 881-4005, or your local Yellow Pages.

YOUR QUESTIONS: Do you have a particular question that you would like answered? To better serve the readers of the Utah Spirit, please direct your questions in writing to Michael A. Jensen, Elder Law Attorney, PO Box 571708, Salt Lake City, Utah 84157-1708, or by e-mail at: mike-spirit@utahattorney.com. From time to time, I will attempt to answer some of those questions.