First critical mistake (and the solution) in long-term care planning
First Mistake: Assuming you will never need long-term care
That is a very common mistake. This is something we hear over and over and over: “I won’t ever need long-term care.” I’ve even had people say to me, “You know what? I’ve looked into it and I’ve decided I will never need it.”
I’m sitting there listening this person, saying, “Wow! That’s impressive.”
It’s like saying:
- “I’ve looked into car wrecks and we’re never going to have a car wreck,”
- “I’m never going to have my house broken into,” or
- “I’m never going to break a bone or get sick.”
We can do things to increase the likelihood that we’ll never have to deal with any of those, including long-term care. But ultimately, we cannot control that.
The Book of Ecclesiastes (9:11) in the Bible even talks about how time and chance can overcome the fastest runner or most powerful warrior. It’s the idea that there is a random element. We can be driving perfectly. We can be in the safest car with our seatbelt on, and a drunk driver can change our life dramatically.
It’s a very interesting statement to just say, “I’ll never need it,” because nobody wants long-term care. Nobody wants assisted living. Nobody wants home health care. Also, nobody wants a nursing home. But nursing homes are filled and assisted living facilities are filled. Home health agencies are everywhere.
The place where I get my haircut is in a very small shopping center. Next to it is a home health agency. If you go around the building on the lower level, there’s another home health agency. Then there’s a hospice place next to that. So the health care industry is growing and our population is aging, so it’s a little naïve to just say, “I decided I’m not going to need long-term care.”
“How bad is the cost of long-term care?”
So you say, “Okay. Maybe I will, but how bad is it?” A nursing home is $6,000 a month, average. It can be much more than that. Just $6,000 a month is like you are buying a $1 million home. Most of us will say, “There’s no way I would do that. That’s crazy! That’s too much money.” Well that’s what a nursing home is.
Assisted living facilities are at least $2,500 a month, but often when we’re looking at assisted living facilities, they can be higher than that. It can be as high as $10,000. Often we have a loved one in an assisted living facility and we need to provide additional care for them – maybe sitters or other types of people to help – so that cost can skyrocket. Even if we’re staying at home, we’ll start getting into, “I need round-the-clock care,” or “I need somebody to be there 20 hours out of the day.” It doesn’t take very long before that adds up to a tremendous amount of money per month. So the cost of long-term care is very expensive.
“What are the odds of needing long-term care?”
Mark Twain said, “Figures never lie, but liars figure.”
We have to be careful of statistics because we don’t know exactly what somebody is talking about. Put it in the context of a car wreck. We all drive a car. If I said, “You have a 74% chance of being in a car wreck in your life,” what does that mean? Does that mean a little fender-bender and nobody’s hurt? Does that mean a drunk driver hits you head on? What does that mean?
It’s the same thing when we start looking at statistics for long-term care. We need to know exactly what we are talking about for the numbers to make sense.
Here’s the practical side of it. If you never need long-term care, that’s wonderful. But the older you get, the more likely it is that you will need it. If you need it and look at the cost, you’ve got to figure out a way to be able to pay for that long-term care.
When you think about odds, think about this.
If I asked, “Do you have insurance on your house?” I expect you would say, “Yes.” And if you don’t own a house, do you have renter’s insurance? You would say, “Of course.”
How many times in the past year has a fire burned down your house? Hopefully all of us could say that hasn’t happened this year. In the last five years, how many times has your house burned down? Again, hopefully, that doesn’t happen.
Then why do we keep insurance? Some people have a mortgage and have to, but the real answer is because we understand how devastating it is if our house burned down. It’s the reason we have health insurance. You might say, “I haven’t been to the doctor in 20 years,” but if you needed something, if you have some disease or some accident, you would want health insurance.
It’s the same thing with your seatbelt. I’ve been driving 26 years and I’ve been in one wreck that was of any significance. How many times do I drive – once a day, twice a day, three times a day? I put my seatbelt on all those times. If I don’t get in a wreck, I don’t need that seatbelt. But I still wear it because I understand the consequences should I be in a wreck.
It’s the same thing with long-term care. We have to realize that this is a real possibility.
Solution to First Mistake: Assume that long-term care will be necessary
Here’s your solution. Not in terms of being “negative,” but you need to assume that at some point long-term care will be necessary. That’s not saying, “Oh, I wish this to happen” any more than when I get health insurance, home owners insurance, or car insurance I’m wishing for some tragedy. It’s just being smart; it’s being wise. It is showing good stewardship over the things that God has given to us.
So what do you do?
- Find out your options.
- Then you weigh the pros and the cons of each option.
- Then you look at a practical solution.
Here’s what I mean by a “practical solution.”
I could say to somebody, “Do you have life insurance?”
They would say, “Yes. I have a quarter of a million dollars in life insurance.”
Then I say, “Do you think it would be better if you have half a million?”
“Would it be better to have a million than half a million?”
“Yeah. That would be better.”
“How about $2 million?”
It’s always better to have more protection, but at some point we have to be practical. I could lock the deadbolt and put my home alarm on. I guess I could hire guards to be in my house, but that might be impractical. So we’re talking about a practical solution that works for you and your family. You develop these practical solutions through a solid plan which leads to our next mistake…..
Next Step To Take
We will be continuing this series and will work our way through these five common mistakes. We hope you will enjoy reading these and more importantly that you will think about this and take action.
There are all different ways to take action and you have to decide what is best for you.
If you would like more information or if you want some guidance from us, you can call our office at 205-879-2447 or fill out our online contact form to do any of the following (assuming you or your family live in Alabama):
- Set up a phone conference or video conference
- Set up an in office consultation
- Request our free information packages on long term care planning, including Alabama Medicaid and the VA Pension.
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