Long-Term Care Issues

Odds of Needing Long-Term Care Assistance

Recently I have been discussing the realities of paying for long-term care needs with several clients, and thought it might be a good idea to share with you some of these discussions.  Long-term care expenses are the costs you must personally pay for when you need assistance to independently care for yourself.  These activities of daily living or ADLs consist of: Dressing, Bathing, Transferring, Toileting, Eating or Continence.  If you have long-term care insurance, generally a person must need help with two of these six ADLs in order to make a policy claim.  Care needs may also arise when a person has cognitive problems related to diseases such as Alzheimer’s or Parkinson’s.

So what are the risks of needing this type of assistance?

Well if we put the answer into the context of home or auto ownership the answer is shocking.  The odds of our home being seriously damaged by fire are 1 in 96, with the average insurance claim being $170,600.  Having your car damaged in an auto accident is 1 in 5 with the average insurance claim being $27,600.  BUT the odds of needing help with two of the six activities of daily living are 1 in 2, or a 50% chance!  With the average cost of a private nursing home room in the Bay Area being $259 per day or $94,535 per year.  The average stay in a nursing home is 2.5 years.

So with the high odds of needing this type of care, and with the expense totaling hundreds of thousands of dollars if necessary, how can a person plan for these expenses in their retirement income plan?  As you know, I use a 4-step Retirement Income Planning Process, here is the chart:

Michael Ginsberg’s 4-Step Retirement Income Planning Process

Paying for Long-Term Care Expenses:  There are 3 ways to pay for care.  The first is to self-insure or set aside the funds to pay for the care if necessary.  The second is to shift some of the risk to an insurance company through the purchase of insurance.  Or the third is to shift the cost of care to society through either the government or a charitable organization.

If you don’t have the thousands of dollars to set-aside to personally pay for care, then there are several insurance options now available.  One option is the traditional long-term care insurance policy which will pay if the need arises, but the problem is that if you don’t need the care you don’t get any of your premium payments back.  Another option is a long-term care rider tied to life insurance.  The attractive feature to this type of policy is that if you don’t need LTC benefits then your heirs will receive the death-benefit from the life insurance.  The third type of new policy is an annuity with LTC benefits.  This may be a very viable and the least expensive option if you have additional savings to self-insure since this has significant tax saving benefits available.  I would be happy to discuss your best options with you if interested.

Here are some additional research articles I have put together if you are interested:

 Concept Pieces

Life Insurance Riders that Pay for Long-Term Care
Long-Term Care Annuities


Long-Term Care Needs Calculator

 Video Seminars

Planning for Long-Term Care

 Consumer Materials

Long-Term Care Insurance: How Does It Work?
Using Life Insurance Riders to Pay for Long-Term Care

To Your Successful Retirement!

Michael Ginsberg, JD, CFP® 


Welcome to My New Blog

I decided to start this blog to help my clients and friends to better understand the challenges associated with Retirement Income Planning.   As a Certified Financial Planner™ specializing in Retirement Income Planning, I address these challenges with clients on a daily basis.  My practice can be divided into three groups:

  • Pre-Retirement clients who are 5 to 10+ years away from retirement:  For my pre-retirement clients, they are still concerned about the accumulation of assets in order to support themselves during their retirement years.  They are of course challenged in this savings process since they still have obligations such as putting children through college or supporting their own parents.
  • On the cusp of retirement, meaning clients who are within one year of making the leap from full-time employment to either retirement or part-time employment:  As clients face the day that one or both spouses leave their full-time position, they immediately start to experience the fears associated with major life changes.   One common thought/fear I hear is that one spouse is not sure how they will spend their day, or how they now need to find new friends outside of work.  I also hear comments, if one spouse has already retired; they are concerned about the newly retired spouse interfering with their home and personal life processes.
  • Already in retirement:  For my clients already in retirement they see firsthand the choices which they need to make in order to make sure that they don’t outlive their financial resources.  I see these clients wanting to support their grandchildren’s educations at the possible detriment of their own financial well-being.

I firmly believe that almost anyone can plan for and ultimately enter retirement successfully if they follow a specific process.  In the case of my client’s, I use a 4-step process to help them plan for this exciting new phase of life.  Here is what the process looks like:


Each week, I will post a new blog message which discusses one of the 4-steps of my retirement process.  Occasionally, I will post more often if there is some significant change which occurs because of the economy or because of something which happened in Washington, DC.  At other times I may post a video message.  This may be a recorded version of a presentation I give.

I hope this blog can turn into a two-way communication process.  I encourage you to either comment on articles I write, or make suggestions as to topics you would like me to comment on.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®