Many elderly Americans believe that their nursing home or assisted living will be covered by Medicare. That Medicare will ensure your long-term care. However, it’s a rude awakening when they discover that isn’t the case. In fact, as valuable as it is, this government program only pays for short-term medical costs for those over age 65.
This leaves many seniors and their families scrambling to find the tens-of-thousands of dollars per year, necessary for long-term care. Do not get caught off guard, you should start your Financial Planning now. Here are some suggestions.
Calculate Your Net Worth
Before engaging in any financial planning, you have to figure out your net worth. This is much more simple than it seems. According to the experts at Schwab Moneywise, add up the value of your assets. The largest is most likely your home, which can be appraised by a real estate professional or estimated using an online calculator. Others include your car, investments, and money in the bank. After subtracting outstanding debts, you have your figure.
Budget for the Future
This means making an assessment of what level of care you’re going to need and how much that will cost. That’s your long-term goal, but meeting it means taking action today. Start by going over your income and expenses on a monthly or weekly basis. Take note of things that you can do without, while maintaining an enjoyable quality of life. The money that you save can be put away safely into sound investments or a bank account. The more you save will ensure your long-term care.
For more information on how to make budgeting simpler, take a peek at this helpful financial article from Life Enrichments!
Choose a Savings Plan
You may be eligible to set up a tax-advantaged health savings account to pay for your long-term medical care or have your employer do so on your behalf. Contributions up to an annual limit are excluded from your taxable income. However, the law requires that your HSA be paired with a high-deductible health insurance plan. Which has a minimum deductible of $1,350 for an individual or $2,700 for a family.
Repairing Your Credit If Needed
Often, we get ourselves into a mess with credit cards or loans. The interest rates come to a point that paying the debt off is almost impossible. A failing credit score start to incur. Bad credit makes it hard to buy a home, rent an apartment, buy a car and some cases, get employment. Of course the best plan is to use credit sparingly and never get it beyond a point you can pay it off. Once you debt to income ratio gets out of balance, your credit score starts to drop. I ran across two articles, one is a company that are professionals for helping people repair their credit. You can read more about it here: Best Credit Repair Companies. The other is an excellent guide on “How To Improve Your Credit Score Fast.”
There are a number of strategies for building wealth at relatively low risk. This ensures a more stable financial future and the ability to pay for whatever medical expenses arise. Many people opt for a diversified portfolio of stock and bond index funds or a retirement mutual fund with the goal of producing a monthly income. Other options include annuities and bonds.
Leverage Life Insurance
A living benefit program may solve some or all of your problems. This is a loan secured solely by your insurance policy. Regardless of your credit history that allows you to recuperate up to 50 percent of your policy’s death benefit, which must be at least $100,000, while the rest of your family remains covered. This leaves the money available to pay for a variety of health expenses including assisted living and nursing homes.
Get a Reverse Mortgage
A reverse mortgage is a loan that the elderly can take out against their home’s equity, and it can be paid out in a lump sum, monthly installments, or as a line of credit. This money can be used for assisted living, a nursing home or even home modifications for aging in place. It works best for those who have the majority of their wealth tied up in their property. The loan is normally paid back to the lender after the home is sold.
Plan for Your Funeral
Although none of us want to think about it, there will come a day when we pass on. This means we’ll need to make arrangements for our funeral, and the sooner you do so, the better. In addition to planning your funeral and burial. You need to think of ways that you can save your loved ones from having to shoulder the financial responsibility. While you’re making all these other financial decisions, look into whether you’d benefit from a burial insurance policy, which can help pay for your funeral and other expenses (medical bills, debt, etc.) so you won’t have to worry about your family members having to cover these costs themselves.
Knowing your options should give you some peace of mind regarding your well-being. However, don’t wait too long to put your financial house in order. The earlier you get started, the easier it will be.