Afraid You’ll Lack Funds in Retirement for Long-Term Care? You Have Company. But Do You Have the Savings?

Published on December 12, 2017

We’ve written before about the predictions many experts have made about increased costs of medical care and related expenses for older Americans – and the fact that many individuals are not preparing adequately now to meet those healthcare costs later. In fact, Genworth recently surveyed 1,200 adults who said that their greatest fear about aging is not having enough money to pay for health care or long-term care. Yet, despite these apprehensions, only 20 percent of Americans have taken proactive steps toward financing those long-term care costs. Another interesting result from the Genworth survey indicated that only 50 percent of adult respondents feel they should be responsible for their own care as they age (the other 50 percent feel it is the responsibility of the government, their family, community or faith-based organizations). Needless to say, this will place a heavy burden on others, as the baby boomers age and retire. According to the survey, there are clearly some misconceptions among many Americans regarding who or what will fund long-term care and how much it may cost:

• 66 percent of Americans think government programs will fund their care, even though Medicare pays a limited amount and Medicaid has very strict financial eligibility requirements.
• 40 percent underestimated the hourly cost of professional help in the home, and 52 percent did not know that a long-term care insurance policy can cover this.
• 70 percent of the people turning 65 today will need long-term care at some point in their lives. Nonetheless, only a bit more than half (52 percent) of baby boomers think they will need these services.
• Interestingly, Millennials and Generation Xers are more realistic – 64 and 65 percent of these groups, respectively, recognize they may need long-term care in the future.

It’s not pleasant to think that as we age, our medical needs and costs will likely increase. However, it is possible to plan for a healthy financial future with self-directed retirement plans and health savings accounts. In a prior post we reminded our readers that health savings accounts (HSAs) may be self-directed (with some special tax benefits) similar to other types of retirement plans. Self-directing a retirement plan enables the account holder to include a broad array of nontraditional investments that are typically not allowed in traditional IRAs and other plans. Whether you choose to fund an HSA to cover your medical expenses or contribute to a self-directed Roth or Traditional IRA, SEP IRA or SIMPLE IRA (and in some cases, a self-directed 401k plan), you can invest in alternative assets such as real estate, commodities, precious metals, promissory notes, private placements and more. At Next Generation Trust Company we believe you’re never too young to prepare for a healthy retirement—which includes making sure you allocate funds for future healthcare expenses. Whether you choose to self-direct an IRA or HSA, we have answers to your questions and everything you need to get started on our website. Our team administers these plans and executes transactions through our sister firm, Next Generation Services, so our clients enjoy full transaction and account support from the same professionals. And, our clients know they can call on us for expert education about all things related to self-direction as a retirement wealth-building strategy. We’re here to answer any questions about the many options and benefits of self-directed retirement plans and health savings accounts. Contact us at Info@NextGenerationTrust.com or 1-888-857-8058 to learn more about funding a healthy retirement by diversifying your portfolio through self-direction.