Long-Term Care

Want to Protect Your Family? Make LTCI a Priority

In a 1997 speech, Rosalynn Carter, the wife of Jimmy Carter, the former President of the United States, made a statement, “There are only four kinds of people in this world”:

  • Those who have been caregivers,
  • Those who currently are caregivers,
  • Those who will be caregivers, and
  • Those who will need caregivers.

Long-Term Care’s Profound Effect on a Family

When a loved one requires long-term care, it can have a profound effect on a family. Studies have shown that providing care to people who are chronically ill can have a detrimental effect on caregivers. This is especially true when the caregiver is the individual’s spouse or other family member.

In addition to the physical and emotional toll it takes on the caregiver, sibling relationships are often challenged when a parent requires long-term care and a family member provides the care. This is true even in the best situations where the family all live in the same area and have previously enjoyed a good working relationship with one another.

This is a huge and growing problem given the following five facts:

  • 10 – 12 million people in the U.S. currently need long-term care services.
  • 70 percent of people who reach age 65 will need some type of long-term care.
  • The number of people over age 65 is projected to increase from 42 million in 2010 to 84 million in 2050.
  • Longevity continues to increase with individuals reaching age 65 having an average life expectancy of 83.2 years.
  • Over 70 percent of all long-term care is provided by family members.

The problem is exacerbated by the fact that 60 percent of family caregivers are employed and the average length of family provided long-term care is 20 hours per week. Alzheimer’s/dementia cases, which currently comprise approximately 20 percent of all long-term care claims, present unique challenges for professional caregivers, let alone family members.

In a best-case scenario, assuming that the family caregiver lives in the area and isn’t working, his/her (most likely her since approximately two-thirds of family caregivers are women) previous day-to-day routine will be a thing of the past. The family caregiver’s emotional and physical well-being will inevitably be compromised as a result of this radical lifestyle change.

Long-Term Care Insurance to the Rescue

Assuming that you understand that (a) long-term care isn’t an isolated situation and (b) there will be a physical and emotional toll on family caregivers and the extended family of individuals requiring long-term care services for an extended period of time, it makes sense to plan for this situation long before it ever becomes reality.

While it generally isn’t inexpensive due to the high cost of benefits and requires a long-term commitment, long-term care insurance, or “LTCI,” is the best solution in many cases. While you’re technically the “insured” when you purchase a LTCI policy for yourself, you’re actually insuring your family.

The fact that long-term care insurance relieves family members of caregiving responsibilities and all of the associated problems that go with it is worth its weight in gold. If ever needed, the cumulative premiums paid for long-term care insurance will generally pale in comparison to the benefits provided, not to mention lost income experienced by family caregivers.

What about the peace of mind knowing that a long-term care plan will preserve the emotional, physical, and financial well-being of those you love and care about? How do you place a price tag on this?

Do you want to protect your family? Make LTCI a priority.

Financial Planning Retirement Asset Planning Retirement Income Planning

Is Your Retirement Plan At Risk?

Before I write about the specific risks associated with retirement asset planning and the strategies that retirement income planners use to address, and, in many cases, mitigate, these risks, let’s take a look at risks that are common to all retirement planning. While many of these are uncertain and/or uncontrollable, each of them needs to be addressed in a retirement plan.

The risks that will be discussed are as follows, with the first three common to all types of financial planning, and each one intended to be a brief introduction vs. a comprehensive discussion:

  1. Inflation
  2. Investment
  3. Income tax
  4. Longevity
  5. Health
  6. Social Security benefits reduction


Although it is unpredictable as to amount and fluctuation as it pertains to individual and overall variable expenses, a key risk that must be considered in the design and funding stages of all retirement plans is inflation. Unlike most types of financial planning where it is a factor only in the accumulation phase, inflation is equally, if not more important, during the withdrawal stage of retirement planning. The longer the time period, the more magnified are the differences between projected vs. actual inflation rates insofar as their potential influence on the ultimate success of a particular retirement plan.


Unless you are living solely off of Social Security or some other government benefit program, you are directly or indirectly exposed to investment risk. Even if you are receiving a fixed monthly benefit from a former employer, although it isn’t likely, your benefit could potentially be reduced depending upon the investment performance of your former employer’s retirement plan assets and underlying plan guarantees. Whenever possible, investment risk should be maintained at a level in your portfolio that is projected to sustain your assets over your lifetime while achieving your retirement planning goals, assuming that your goals are realistic.

Income Tax

Even if income tax rates don’t change significantly as has been the case in recent years, income tax can consume a sizeable portion of one’s income without proper planning. With the exception of seven states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming) that have no personal income tax and two states (New Hampshire and Tennessee) that tax only interest and dividend income), the rest of us need to be concerned about, and plan for, state, as well as, federal income tax. In addition, if you have a sizeable income, it is likely that income tax legislation will be enacted that will adversely affect your retirement plan on at least one occasion during your retirement years.


Unlike other types of financial planning, the time period of retirement planning is uncertain. Although life expectancies are often used as a guide to project the duration of a retirement plan, no one knows how long someone will live. The risk associated with the possibility of outliving one’s assets is referred to as longevity risk. In addition, life expectancies, themselves, are changing from time to time. The August 19, 2009 edition of National Vital Statistic Reports announced a new high of nearly 78 years for Americans. Planning is further complicated for married individuals since you are planning for multiple lives.


An extremely important risk that is sometimes overlooked or not given enough consideration in the design of retirement plans is health. Under-, or uninsured, long-term care events as well as premature death in the case of a married couple, can deal a devastating blow to an otherwise well-designed retirement plan. It is not unusual for a prolonged long-term care situation, such as Alzheimer’s, if not properly planned for, to consume all of one’s retirement capital and other assets. Inadequate life insurance to cover the needs of a surviving spouse can result in dramatic lifestyle changes upon the first spouse’s death.

Social Security Benefits Reduction

Once considered to be unshakable, the security of the Social Security system, including the potential amount of one’s benefits, is questionable. In addition, it was announced in May that for the first time in more than three decades Social Security recipients will not receive a cost of living adjustment, or COLA, increase in their benefits next year. While beneficiaries have received an automatic increase every year since 1975, including an increase of 5.8% in 2009 and a 14.3% increase in 1980, this will not be the case in 2010.

Each of the foregoing six risks needs to be considered, and appropriate strategies developed, in the design and implementation of every retirement plan to improve the chances of success of the plan.