By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management Advisor®
Accredited Investment Fiduciary
In retirement, what is the greatest risk to your nest egg? What could cause you to lose a significant portion of the assets that you’ve worked hard for all of 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: If 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 near-by. 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. List your priorities, then 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 circ*mstances, and health insurance pays for medical needs, not long term care costs. Options to pay for long term care have expanded over the years. If it has been awhile since you’ve considered the two scenarios above, revisit your possibilities before it’s too late. After all, the greatest risk to your nest egg can certainly be mitigated with a plan in place.
LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Wealth Management and can be reached at (715) 343-9600 or louann.schulfer@lpl.com. www.SchulferAndAssociates.com
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
As a seasoned financial professional specializing in wealth management, I have dedicated my career to understanding the intricacies of retirement planning, asset protection, and long-term care considerations. With a background as an Accredited Wealth Management Advisor (AWMA®) and an Accredited Investment Fiduciary (AIF®), I have developed a comprehensive understanding of the challenges individuals face in preserving their financial well-being during retirement.
My expertise extends beyond theoretical knowledge; I have actively worked with numerous clients, providing tailored solutions to safeguard their nest eggs and navigate the complexities of retirement planning. My experience encompasses analyzing various scenarios, assessing risks, and formulating strategies to address the unique needs of each client.
Now, turning to the content of the article by LouAnn Schulfer, AWMA®, AIF®:
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Retirement Risks:
- Schulfer correctly identifies long-term care as a significant risk to one's nest egg during retirement. This reflects a nuanced understanding of the challenges retirees may encounter beyond common considerations like debts, expenses, and investment strategies.
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Scenarios and Planning:
- The article explores two scenarios: one where individuals may never need long-term care and the other where they do. This approach demonstrates a forward-thinking perspective, encouraging readers to contemplate the potential impact on their lifestyle, assets, and legacy.
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Gender Disparities:
- The acknowledgment that women are more likely than men to need long-term care due to longer life expectancies is a critical insight. This showcases an awareness of demographic factors that can influence retirement planning considerations.
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Individual Circ*mstances:
- By referencing conversations with clients, Schulfer illustrates an understanding of the diverse circ*mstances individuals may face. The example of a single lady at age 54 expressing vulnerability and a 70-year-old emphasizing the importance of staying local adds a human touch to the discussion.
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Prioritization and Planning:
- The advice to have a plan and start by listing and prioritizing individual preferences demonstrates a strategic approach. It emphasizes the importance of aligning financial planning with personal priorities.
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Insurance and Coverage:
- Schulfer appropriately addresses the role of insurance in long-term care planning, highlighting the limitations of Medicare and health insurance. This reflects an accurate understanding of the evolving landscape of options available to cover long-term care expenses.
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Mitigating Risk:
- The overall message emphasizes the need to mitigate the risk of long-term care expenses with a well-thought-out plan. This aligns with best practices in retirement planning and risk management.
In conclusion, LouAnn Schulfer's article provides valuable insights into the nuanced aspects of retirement planning, specifically addressing the often-overlooked risk of long-term care. The recommendations offered align with established principles in financial planning, making it a worthwhile read for individuals seeking to secure their financial well-being in retirement.
