What is the Greatest Risk to Your Nest Egg?
In retirement, what is the greatest risk to your net worth? What could possibly cause you to lose a massive portion of the assets that you’ve worked hard for all your life? For most people, debts are paid off. Expenses are in-check. Children are grown and independent. Liability risks are low. Investments have been well thought out. For most people, the greatest risk to their nest egg is the possibility of needing long-term care.
Envision these two scenarios. #1: You may never need long term care. So, let’s say you put a plan in place and never use it. How did not engaging your plan affect your lifestyle, assets, and what you intend to leave for the people who are dear to you? Did having a plan that you never used create the same stress that not having a plan could create? Scenario #2: Let’s say you or your spouse do need some sort of care. What is your plan? How will you financially cover the costs of in-home care, assisted living or skilled nursing if needed? Who will provide the care? If you have insurance or if your plan is to rely on the government to pay for care, what type of care will be covered, and which facilities will accept the amount of money your insurance or the government is willing to pay? Will you have to supplement your coverage?
Women are more likely than men to need long-term care, probably because on average, we live longer. The likelihood of needing assistance increases if you are single or widowed, after all, you are likely living alone. I’ve had many conversations with clients on managing the risk of future long term care expenses. What would it look like if you were to need some form of long-term care? Two single ladies immediately come to mind. One, at age 54, said it would be the most vulnerable feeling of her entire life. Another, age 70, brought up an excellent point: top of her list of priorities would be to stay local, where she has friends and loved ones nearby. For married couples, the priority is most often to not compromise the income or assets of the spouse who is not receiving care.
My advice? Have a plan. Where do you start? With your priorities. Rank them in order of importance. Build your plan around what is most critical to you.
Having a plan may or may not include insurance. Most people understand that Medicare may pay for a limited amount of care under specific circumstances, and health insurance pays for medical needs, not long-term care costs. Other options to pay for long-term care have expanded over the years. If it has been a while since you’ve considered the two scenarios above, revisit your possibilities before it’s too late. After all, plans can be put in place to help mitigate the greatest risk to your nest egg.
LouAnn Schulfer of Schulfer & Associates, LLC Wealth Management can be reached at (715) 343-9600 or louann.schulfer@lpl.com TheWealthInformationLady.com SchulferAndAssociates.com
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
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