If getting your Long Term Care planning done right is a concern, you can perhaps begin by considering the following:
1. Do up a Lasting Power of Attorney (“LPA”)
The LPA is a legal document which allows you to appoint someone you like and trust to help you make decisions should you lose your mental capacity one day. Being in need of Long Term Care (i.e. suffering from disability) does not automatically lead to the activation of the LPA if one is still mentally alert but the activation of the LPA will mean that the person is definitely in need of ongoing Long Term Care.
I’ve written previously on the 5 levels of ElderCare and in the article I shared what I’ve learned about Long Term Care in the United States. Everything in Long Term Care simply boils down to having a place to stay and someone to help. The LPA is the tool to appoint someone and make it easier for him or her to take decisions on your behalf should mental incapacity happens. The side benefit in having your LPA done is that you will really think through your plans and decide on a primary caregiver.
During the unhealthy years, it is a blessing to having someone who is willing to be responsible for your caregiving. However, this alone is not enough. That someone needs to have the financial means and resources to do the job which brings me to the next point…
2. Upgrade Your ElderShield
If you have not opted out of ElderShield, you will receive $400 a month for a period of 6 years if you lose the ability to be independent. The total payout for ElderShield is $28,800. As I alluded to earlier, the average long term care costs for an elder in Singapore from 2030 onwards will be $183,600 in total. Upgrading your ElderShield coverage to cover the difference will be the logical, sensible and rational thing to do.
Yet, from my observation, there are still some who have chosen not to upgrade their ElderShield. In fact, besides those who have chosen not to upgrade, there are others who have opted out of the ElderShield scheme altogether. There can be many reasons for this and one particular reason given by people whom I’ve spoken to is that while the consequence of needing Long Term Care is worrying, it is not a guarantee that it will happen to them.
Thus, the preference is to save and invest the insurance premiums for retirement which of course is a certainty. This also brings me to my next point…
3. Blend Long Term Care into Retirement Planning
In the 3-phase retirement concept, the unhealthy years are also known as the “No-Go” years. As the “No-Go” years are recognized as part of retirement, there is intentional financial planning for the “No-Go” years as part of overall retirement planning. Not so long ago, separate insurance plans such as ElderShield supplements or critical illness insurance coverage are used for this “No-Go” phase.
However, there are now retirement annuity plans with long term care protection available. This type of plans are designed primarily for retirement income planning by providing an income for a number of years during retirement. What is unique about such plans is that should disability happens during the income pay-out period, the income pay-out will increase. If no disability happens, the plan will pay out the income as normal.
I’ve incorporated these type of plans into my retirement planning recommendations for clients and I’ve found that it is much easier for most people to accept as the feeling is that of playing a “Win or Draw” game.
If blending Long Term Care into Retirement planning appeals to you, you can use this Guide to Annuity Plans (With Long Term Care Protection) to learn more about this strategy.
(NOTE: Get our Guide to Annuity Plans with Long Term Care Protection to help you understand this type of plans and the key features that you need to consider in selecting a suitable plan for your needs. Get your guide Here)