Here are some strategies to make sure your assets remain safe after retirement.
- Estate planning – Establish a will or trust to dictate how your assets will be distributed after your passing. Give a durable power of attorney to manage your financial affairs if you become incapacitated. In addition, properly title your assets, especially jointly-owned ones, to avoid probate and potential disputes over ownership.
- Long-Term care insurance – This can help cover the costs of extended care services, such as nursing or in-home care. Research different policies and options to find one that suits your needs and budget.
- Form an Irrevocable Trust – An irrevocable trust can protect your assets from potential legal claims. By transferring assets into the trust, they are no longer considered part of your estate and are shielded from certain liabilities.
- Maximize retirement benefits – Save money for your future in special retirement accounts like 401(k)s and IRAs. This helps you save on taxes and get extra money from your employer. Also, plan smartly to get the most benefits from Social Security as you get older.
- Maintain adequate insurance coverage – Make sure to check your insurance policies like home, car, and umbrella insurance regularly. This will help you have enough coverage in case something unexpected happens or if there’s an accident.
- Diversify your investments – When you diversify your investments, you spread your money across different types of things you invest in. This helps you protect your money from big changes in the market. So, if one thing doesn’t do well, the others can still help keep your money safe. As a rule of thumb, people avoid high risk investments.
- Homestead exemption – In some states, homestead exemption can help protect your main home from certain problems. For example, it may keep creditors from taking your house away.
- Medicaid planning – If you anticipate needing Medicaid assistance for long-term care, consider consulting an elder care attorney experienced in Medicaid planning to protect assets while meeting eligibility requirements.
Long-Term Care Insurance
Purchasing insurance, like long-term care insurance, when you are in your 40s or 50s can be one way to protect your assets from rising health care costs in retirement.
Here is what you should consider when evaluating insurance options:
- Coverage Options – Long-term care insurance policies can vary widely in coverage. Some policies cover care received at home, while others may include coverage for assisted living facilities or nursing homes.
- Elimination Period – The elimination period is the waiting period before the insurance coverage kicks in. Seniors should consider how long they can self-fund their care before the insurance benefits start.
- Benefit Period – The benefit period refers to the time or the maximum amount the insurance will pay for long-term care services. Lengthier benefit periods generally come with higher premiums.
- Inflation Protection- Adding inflation protection to the policy can help ensure that the benefits keep pace with the long-term care costs.
- Premiums and Affordability – Consider the premiums and how they fit into your retirement budget. Premiums can vary based on the level of coverage and the age at which you purchase the policy.
Consulting with a financial advisor in long-term care planning can help you make informed decisions and create a comprehensive plan to cover potential care needs in retirement.