It's estimated that a person has a 70% chance of needing long-term care assistance when they reach age 65.1 With odds like that, it's important to have a plan in place that can enable you or your loved ones to maintain a high-quality standard of living and be ready for whatever might come your way, medically, financially, and personally.
It's not always easy to do so, however. Nobody likes to think about their own mortality or the potential health issues we might face as we age. We often put off this kind of planning until we can no longer ignore it, such as when a parent or older family member—or even we, ourselves—experiences a health crisis.
In my family, I had relatives who passed quickly and unexpectedly, some who experienced long illnesses, and many who lived long lives and passed in the most ordinary of ways. Some lived independently in their homes with the help of neighbors, friends, and family, while others had care brought in. Some lived with family, some lived in senior communities, and some spent some time in skilled nursing facilities. These experiences have influenced my own perspective and helped me begin planning for what I would like to have for myself. The most lasting impression is that I don't want to have to make a decision in the spur of the moment or worse, have the decision made for me by someone else.
While it's never too late to create a plan, it can become more challenging as we get older and can be especially difficult should we wait until a crisis occurs. With the right information and a little guidance, you can easily develop a thoughtful, well-crafted, long-term health plan that is clear about your goals and wishes, realistic about what challenges you might expect to face, and optimized to provide you the best chance of covering necessary expenses in your old age.
1. Be clear about your goals and expectations
Any long-term plan should begin with your vision for your future. Ask yourself: What do I want for myself? What do I consider to be the ideal outcome? This vision can serve as your north star as you develop your plan.
It's important also to be realistic about what you might be able to expect in the future. Look at your family's health and medical history. While the experiences of our parents and grandparents are not always correlated to our own, it may give you some perspective on the types of challenges you are likely to face. Talk to your health care providers to better understand your own health and what you may need to do to maintain or improve it over time. Be honest with yourself about how much help you may need and where it may need to come from. How much will you need—or be able—to rely on your children or grandchildren for help?
An honest assessment of your wants, needs, and available resources will have you well positioned to make the specific choices that can help you achieve your desired quality of life.
2. Assess your living situation
According to the AARP, 78% of seniors want to stay in their current homes as they grow older.2 But chances are our homes are not well equipped for our needs as we age. According to the CDC, falls are the leading cause of injury-related deaths among those aged 65 and over.3
If your intent is to stay in your current home long term, you may need to modify or renovate the home to make it more convenient for you as you get older. This could include adding railings and handholds, making cabinets and closets more accessible, or fitting entryways with ramps. Some friends of mine, who built their own multi-story "forever" home, included an elevator in the expectation that they may someday have difficulty using stairs.
It may be wise to consider making such modifications earlier, perhaps while you're in your 50s, to save time, money, and inconvenience down the road. If such changes are too daunting or too expensive, you may want to consider downsizing to a residence that would be more forgiving of future age-related limitations. Making a move like this sooner rather than later will give you time to adjust and adapt to your new environment. At a certain age, it can become too daunting to familiarize yourself with a new home and community.
One thing many people may not consider when assessing their living situation is how close they live to sources of assistance, such as their family or health care providers. Having potential helpers nearby can be a significant asset and should be a major factor in where you decide to live.
3. Get your documents in order
Documentation is key to making sure your wishes are carried out appropriately and can be an essential tool for your family should a crisis arise. I generally recommend that people have the following estate planning documents in place:
- A will, to designate who will settle your affairs after you pass and to specify who should receive assets that don't pass via beneficiary designations or titling.
- A financial power of attorney, to allow someone else to manage your financial affairs in the event you are unable.
- A health care proxy, or power of attorney, which gives someone else the authority to receive information about your health and medical options and make decisions for you if you are unable.
- A living will, which conveys your wishes about your care and end-of-life decisions to your health care proxy.
4. Talk to your family
All this planning could be for naught unless you've had a frank discussion with your family about the details. Those close to you should be aware of your wishes and have access to the documentation you've had drawn up, so they are able to carry out those wishes in the event you are ill or incapacitated.
Talking to our family about our mortality and our money can be very difficult. But full disclosure may not be necessary, especially when it comes to your financial information. If you're wary about revealing specifics about your assets, it may be enough to ensure that your family knows the basics: how many accounts do you have and at what institutions; how are they titled; what are the beneficiary designations; who are the key people who needed to be contacted, such as trustees or executors. This kind of information can help them quickly assess and address the situation should the need arise.
5. Consider health savings accounts and long-term care “hybrid” insurance policies
If you are enrolled in a high-deductible health plan, you have the option of opening a health savings account (HSA). This is a tax-advantaged account that you can contribute to on a pre-tax basis. Growth in the account is free from federal tax, as are withdrawals, provided they are made for qualified medical expenses. Contributions are limited. (To find out how much you can contribute this year, read our article on HSA contribution limits and eligibility rules.) While an HSA may not be for everyone—the high deductible of the health plan should be taken into consideration—it provides an attractive option for those who can fund current medical expenses and are looking to plan for future medical expenses.
Additionally, “hybrid” insurance policies, which combine life insurance with long-term care insurance, may be worth considering. These policies allow you to accelerate the death benefit of the policy in the event you have a long-term care need (as defined by being unable to perform at least 2 of the "activities of daily living," such as eating, bathing, or dressing, without assistance). Unlike traditional long-term care insurance, it's not a "use it or lose it" proposition; it's much more flexible.
Work with a professional
Planning for long-term care can be both technically and emotionally challenging. Depending on how complex your situation is, partnering with a qualified professional who can help you anticipate potential outcomes and guide you through both the financial and personal particulars can be a major help. If there's one thing I've learned from my experiences, it's that we will all need some form of assistance at some point in our lives, and we can't be shy about seeking it out.