Retirement often brings on daunting dilemmas

Your Money


Planning financially for ill health sounds like one of those textbook personal finance "musts" to be checked off every retirement-planning to-do list.

Until you try it.

Terry Hatch, 77, of Wheaton, Ill., faces a common, though not easily resolved, dilemma.

He and his wife, Jean, 70, are in good health, but they live in a second-floor condominium and worry that one day they won't be able to climb stairs. They explored alternative living arrangements that would let them move now, before a dire situation forced a quick decision.

They checked out some assisted-living arrangements that required upfront costs for an apartment and meal service that were out of their price range - $225,000, plus more than $2,000 a month.

And there were emotional costs. Describing a brochure from one assisted-living complex that promoted all of its services under one roof, Terry Hatch was left wondering how fulfilling such a life would be.

"We just spent three weeks in China on an adventure travel trip," he said. "We're not quite ready to go to a warehouse for seniors where you stay inside all day."

So the couple are staying put.

But countless Americans face dilemmas on how to prepare for the day they need help getting by. The choices can be daunting, and expensive, for long-term-care insurance, nursing homes or assisted-living facilities.

In its annual benchmark cost survey, Genworth Financial Inc. reported in March that the annual average cost of a one-bedroom unit in an assisted-living facility rose 7 percent from last year to $32,294. The average hourly rate for a home-health aide jumped 13 percent, to $25.32 an hour, and the average annual cost for a private room in a nursing home was $70,912, a 2 percent increase.

Some planners say buying into assisted-living facilities too early just for the peace of mind isn't worth it.

"I don't think I'd pull the trigger until I actually needed assistance," said Warren McIntyre, a financial planner in Troy, Mich. "There's nothing wrong with staying put."

One strategy that can help with longer-term planning is to purchase long-term-care insurance, which McIntyre generally recommends clients obtain when they are in their 50s. Some advisers recommend it earlier, starting at 40. This insurance covers nursing-home or assisted-living care, as well as home-care services, depending on the policy.

But the number of people who end up using extended-care services early is so small that many advisers recommend waiting, even into your early 60s. Of course, the older and sicker you are when you start, the higher the premiums will be, or you may not qualify at all.

A Genworth spokesman said policies purchased by people in their 50s generally cost $2,000 to $3,000 a year, depending on policy type.

Edward Kirchmier, a planner in Hollywood, Fla., counsels clients to think about long-term care in much the same way as homeowner's insurance - a necessary item, but something you hope not to use.

Even if you do decide to buy a long-term-care policy, a befuddling task awaits.

The AARP Public Policy Institute released a report this month on the state of long-term-care insurance choices nationwide, and the results weren't encouraging.

"Consumers are getting into the [long-term-care insurance] marketplace and finding a confusing morass," said Enid Kassner, an AARP senior policy adviser and an author of the report.

The report called on the insurance industry to standardize policy benefits, provide at least the same level of benefits that federal government workers receive in their plans and widen the types of living arrangements that qualify for benefits. Federal workers' coverage includes several different types of care facilities, with up to a 90-day waiting period before benefits kick in. Employees pay the premiums.

For their part, consumers need to be certain they read and understand every section of their policy, Kassner said.

You can check out policy details through your state health insurance assistance program (

Emotional blocks are sometimes just as daunting as the technical hurdles, said Mary Brooks, a financial planner in Colorado Springs, Colo.

"I start talking about this with clients when they turn 40 because nobody wants to talk about it when they're older," said Brooks, who has been involved in caring for several older family members.

"People's expectations of what they are capable of doing are far higher" than what they can realisticallydo, she said, referring to family members' abilities to care for aging kin without paid help.

Janet Kidd Stewart writes for Tribune Media Services.

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