I called the national Social Security phone line last week to discuss survivor benefits. (More on that later.) Of course, the person I spoke with could not actually process my claim. Instead, he had to schedule a future telephone appointment to do that, with my local Social Security office. The first available appointment time was in August. Keep that in mind if you need to apply for a benefit that cannot be processed online. Before I called to file a claim, I did a lot of research on what I was about to do. Given my circumstances, determining the optimum filing strategy was quite complicated.
Because of a personal tragedy I have been away from this blog for an extended period. I may write about this tragedy when the time is right but for now, I need to return to retirement planning and related topics. The need for retirement planning and living has not ended. Today, the topic is long term care insurance. There have been some important developments worth sharing.
Most of the news I read about long term care insurance is bad. Insurers as a group did not properly analyze their risk. Consequently, they are imposing huge premium increases on policy holders and/or exiting the business altogether.
The Wall Street Journal has engaged a number of personal finance experts to debate several topics of importance to the rest of us. One of these recent debates was over the question of whether we should purchase long term care insurance. The expert in favor of purchasing LTC insurance is a professor of health economics and policy at George Mason University. His argument is that “hoping for the best” is not a wise or effective financial strategy.
The expert that disfavors LTC insurance is a staff attorney at California Advocates for Nursing Home Reform. His argument is that instead of buying the insurance with a $3500 annual premium, invest the premium amount., giving you $70,000 plus interest in 20 years. There is a huge psychological flaw in that argument. The average consumer will not have the discipline to actually invest the premiums that are not paid. They are much more likely to spend it. Also, for older boomers, there is no reasonable assurance of 20 years without a long term care need.
Here is the link to full debate article which is definitely worth reading.
Financial and retirement writers are regularly pumping out articles about long term care insurance. A lot of what is written is negative, such as when an insurance company decides to stop selling long term care policies. For example, my wife and I bought long term care policies from Met Life in 2008. Met Life later announced that it would stop selling new policies at the end of 2010.
What are your plans for long term care? Is it the “I won’t need it so don’t worry about it plan?” That is not a plan, of course, and if you are leaning in that direction (or just sticking your head in the sand), I encourage you to read why I bought long term care insurance and predicting the costs of long term care. That may jolt you back into a state of reality. (Sorry – someone had to do it!)
Do you gamble with your retirement future? I’m not referring to merely ignoring or not having a plan for retirement. I’m talking about acts of commission or omission that place your retirement plan at serious risk. A recent news article about a 66 year old hopeful retiree reminded me of this.
Every baby boomer needs to think about long term care needs and costs. The odds are quite high that one of you will need it. Can you afford it? [Read more…]
The closer I get to age 65, the more curious I become about Medicare. Earlier in my retirement thinking (perhaps five or ten years ago), I casually made some assumptions about Medicare – both positive and negative – that turned out to be untrue. This earlier thinking was generally along this incorrect path: Medicare is free, covers most everything an older person would need, but finding providers who would accept Medicare would be difficult. Now my thinking about Medicare is more accurate but there are still some myths out there.
One of the biggest questions in long term care insurance is “How much coverage should we have?” I have researched and thought about long term care coverage and amounts quite a bit in the past year. [Read more…]