In recent years, tax policy has tended to change depending on which political party held the reins in Washington, D.C. These swings mean you need to review your estate plan regularly. At a minimum, every few years. (It’s a good idea to do that regardless of tax laws, in case there are changes in your assets, beneficiaries, or other circumstances.)
Reducing expenses is everyone’s least favorite part of financial planning, but when overspending becomes a problem, it’s important to have a plan at hand that can help you quickly reduce expenses and eliminate further stress. An important consideration for all retirees who find themselves overspending is the following question: Are there any lifestyle changes that would help to save or free up money for other essential, unavoidable expenses?
Compare Costs, Types of Service in Your Area
The rising cost of long-term care, coupled with an increasing array of options, can make it difficult for families to find the best, affordable care. AARP provides a handy dandy calculator that can assist with that process by estimating the cost of long-term care. Options include expenses for care in a nursing home, assisted living facility or adult day care, and use of a home health aide or homemaker service.
The longer you live, it makes sense to delay Social Security until your FRA or age 70. If you qualify for Social Security, you can take it as early as age 62 or delay it as late as age 70. However, there are pros and cons for each option, and the optimal choice will be unique to you.
If you decide that waiting is the right decision, needing the money could prevent you from following that choice, but there are some actions you can take in advance that can help prevent this.
Here is some information from a recent Fox Business article you may find useful:
Long-term care, whether provided in a private home, a nursing home, an assisted living facility or a continuing care retirement community, is expensive. According to the 2020 Genworth Cost of Care Survey, the median national rate for a private room in a nursing home is over $100,000 a year.
Many family caregivers and seniors assume these costs will be taken care of by Medicaid, the jointly funded federal and state program that provides health insurance for people with low income and limited assets. When it comes to long-term care, this public assistance program does pay for the largest share of these services, but only if a senior meets strict financial and functional requirements. Medicaid is administered by each state, so keep in mind that criteria can vary considerably from one state to another.
Every day I hear stories or talk to folks who were doing just fine, thinking they had a firm plan in place for their future, until someone (typically a spouse or a parent) gets sick. As the illness continues, now faced with long-term care expenses, they realize their ‘plan’ did not include nearly enough to keep up with the ever-increasing health care costs.
“How will we pay for this?” Is the number one question I hear regarding long-term care. Long-term care costs have two components, the nursing home, assisted living, or living situation, and the indirect component, the unpaid caregiving. The people who come in to help you, your family members, or the things that long-term care insurance doesn't cover. Did you know over $500 billion a year is spent in ‘unpaid’ caregiving in this country? And these costs get higher every year.