When you are looking ahead toward your retirement years, you probably have some big plans on the agenda. You can travel to those places that you have always wanted to visit, enjoy your favorite leisure activities, and spend quality time with your family and friends.
If you have taken the right steps along the way to prepare yourself financially, this part of your life can be very enjoyable. At the same time, from a planning perspective, it is wise to consider the eventualities that you may face during the next stage.
Anticipated Longevity
There are some experiences that you just can’t understand until you have had them for yourself, and this would definitely apply to aging. The way that you feel when you are in your 80s will naturally be something that is impossible to wrap your head around today.
Though this is simply human nature, you may well have that experience. The Social Security Administration has a longevity estimation tool on their website. According to the calculator, the life expectancy for a man that is turning 67 today is 85 years; it is 87 for a woman.
The United States Census Bureau tells us that the oldest segment of the population is growing faster than any other. Clearly, when you digest these statistics, you can see that it is wise to prepare for the long haul.
Alzheimer’s Disease
Everyone has heard of Alzheimer’s disease, but its widespread is rather surprising. About one third of people that are 85 years of age and older have contracted the disease. Many individuals with Alzheimer’s induced dementia require nursing home care, and there are other causes of dementia.
Nursing Home Costs
A lot of Alzheimer’s sufferers require nursing home care, and there are people that need this level of care for other reasons. In California, the average cost for a year in a private room in a nursing home is well over $100,000. Married couples may face two different rounds of nursing home costs.
If you are thinking that you are not too concerned because you will qualify for Medicare as a senior, you are in for an unpleasant surprise. Medicare will pay for convalescent care after an injury or illness, but it does not pay for the custodial care that nursing homes provide.
Medi-Cal Planning
The Medi-Cal program (which is California’s name for Medicaid) will pay for a stay in a nursing home. Since it is a need-based program, there is a low asset limit of just $2000, but there are some forms of property do not count.
Your home is not a countable asset, and in California, there is no equity limit at all. One motor vehicle is not counted, and wedding rings, engagement rings, and heirloom jewelry are exempt.
You can have a prepaid burial plot and $1500 set aside for final expenses. Unlimited term life insurance is allowed, along with whole life insurance that is valued at no more than $1500.
When a healthy spouse can still live independently, they would be entitled to a Community Spouse Resource Allowance. This is half of the shared countable assets, but there is a limit of $128,640 this year.
If a single person is applying for Medi-Cal to pay for long-term care, almost all of their income would have to go toward the cost of the care. This requirement is waived if a healthy spouse is relying on all or some of the income to maintain a basic standard of living.
The healthy spouse would receive a Monthly Maintenance Needs allowance. In 2020, the allowance in California is $3216.
Schedule a Safe Medi-Cal Planning Consultation!
We are here to help if you would like to put a nursing home asset protection plan in place. You can schedule a remote consultation if you call us at 310-337-7696. There is also a contact form on this website that you can use to send us a message.
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