Anthony Pellegrino, Goldstone Financial Group founder and firm principal, has dedicated his practice not only to helping individuals plan for their financial future but also remaining by their side as a partner in achieving their desired results. When Goldstone Financial Group helps a client prepare for retirement, they aren’t afraid to talk about the worst-case scenarios.
“Everyone likes to hope for the best - heck, we like to hope for the best,” Anthony Pellegrino says, “But we have to think about the practical issues, too. The last outcome we want is for a client to put away money every day for two, even three decades and then find themselves struggling to pay their bills after an unexpected and financially catastrophic life event.”
Anthony Pellegrino explains that one major concern many people forget to consider is the eventual need for long-term care.
According to data from the Pew Research Group, 10,000 Americans surpass the age of 65 every day - and will continue to do so for the next 19 years. As the Baby Boomer wave crests retirement age, the sheer volume of retirees makes planning for post-career life more important than ever before. Living in an assisted or long-term facility, however, is far from a popular option. Researchers for a recent study from the AARP found that 87% of surveyed seniors intended to spend their sunset years at home.
Aging in place, however, may not be in the cards for some. A recent report provided by the Urban Institute suggests that just over half of those seniors reaching retirement age today will struggle with a disability that will require them to seek long-term care - although the majority will not need those services for longer than two years. One in seven of retirees, however, will require LTC for over five years.
Anthony Pellegrino shares that in many cases, people tend not to consider that they may need nursing care. “It’s uncomfortable for the client,” he says, “They don’t want to consider the possibility that they may be in a nursing facility for a year or more. But in my experience, the cost of overlooking these contingencies is just too high to put aside.”
Skilled nursing homes provide comprehensive nursing care, meals, assistance with everyday tasks, 24-hour supervision, and rehabilitation services for those struggling with physical ailments. For seniors with faltering health, these offerings are wholly necessary - and just as expensive as one might expect.
A stay at an average nursing home costs seniors thousands of dollars every month. Data published by the Department of Health and Human Services places the cost for a month-long stay at $6,844 and $7,698 for a semi-private and private room, respectively. Over a year, the bill would top $92,000 - and to make matters worse, it would not include the expenses for other living or healthcare services. Fidelity estimates that the average cost of health-related services for a couple stands at over $280,000 even without accounting for long-term care. Making matters worse, Medicare does not typically pay for extended custodial care - leaving seniors responsible for paying either out of their retirement funds or via privately-obtained insurance.
However, Goldstone Financial Group does have a few options for those who want to prepare for the possibility that they might need long-term care at some point during their retirement.
Option #1: Purchase LTC Insurance
A privately-offered long-term care policy will cover most assisted living, nursing home, hospice, and adult day care costs. However, they do come with a few catches: these policies are notorious for their rising premiums and are only available to those who do not have certain types of health concerns or pre-existing conditions. Make sure to shop around before you move forward with a plan; the best LTC packages will give your unused benefits to your beneficiaries after your passing. Premiums for LTC insurance do tend to rise with age, so it is generally best to obtain one well before retirement if possible.
Option #2: Purchase an Enhanced-Benefits Annuity
Though Goldstone Financial Group typically steers away from annuities given their high fees, surrender charges, and holding periods. However, there are a few annuity-model products that could be valuable to seniors who want to pay for long-term care. Certain annuities will offer excellent LTC benefits if a client foregoes their tax-free death benefit. That said, seniors should discuss any annuity contract with a certified fiduciary before they sign to ensure that it is indeed their best option.
Option #3: Purchase an Enhanced-Benefits Life Insurance Policy
Some life insurance policies have riders that will allow you to draw funds before you pass on, allowing you to pay for any needed long-term care. These riders do come at a cost - usually an increase to your monthly premium. These policies typically require enrollees to meet specific health requirements. Similarly to LTC-specific insurance, these life insurance policies will also provide a tax-free death benefit to your beneficiaries in the event of your passing.
Anthony Pellegrino says that in the end, the type of product you invest in matters less than whether or not it covers you during catastrophic circumstances.
“The costs of long-term care don’t need to eat into your hard-earned nest egg,” Anthony Pellegrino asserts, “But if you aren’t adequately prepared for the need, you may find yourself struggling to fund the remainder of your retirement.”