Column: Planning For Long-Term Care

[Written by Carla Seely]

When my grandfather died last year, having spent the last three years of his life in a nursing home, I began to think about long-term care for the elderly. My grandfather was fortunate; he had two sons who made sure he was in a good facility and that the type of care he needed was available to him. That care was expensive, and luckily my grandfather could afford it.

Most people are not willing to accept the brutal truth that despite how much we may think of ourselves as superman or wonder woman, most of us will reach old age and will need help. You seldom hear of a healthy elderly person simply dropping dead; most elderly people will need some form of care as they navigate the final stages of their life.

In my own personal situation as a married woman who has no children, planning for long-term care without a family to guide me through the process is quite frightening. The difficult reality for me, and for my husband, is that we will probably face the dilemma of long-term care. So, the question has to be asked, what is long-term care and how do you plan for it?

Long-term care, as defined by the National Institute of Aging in the USA, is care that involves a variety of services designed to meet a person’s health or personal care needs for a short or long period of time. When people can no longer perform everyday activities on their own, long-term care can provide services to help them to live as independently and safely as possible. Furthermore, long-term care can be home-based or facility-based, as determined by the needs of the individual.

Whether long-term care is home-based or facility-based, it will cost money. Currently, I am not aware of any locally based insurance provider that offers long-term care insurance, so the cost of this care will rest firmly on the shoulders of the individuals who need it or other family members that might need to financially support it.

There is no golden solution as to how to plan for long-term care financially other than saving and making this eventuality a part of your overall retirement plan.

Understanding your family dynamics is a great starting point. This understanding can indicate a possible timeframe as to how long to plan for; for example, if your parents and grandparents lived into old age, the chances are that you will probably follow a similar path. However, if the last five years of your grandparents’ and perhaps your parents’ lives required a form of care, then the chances are that you will have similar needs. You need to factor these eventualities into your own long-term care planning.

The investment vehicle you choose to fund your long-term care is a personal choice. However, it is a choice that should be made early to allow time for your investments to work in your favour.

The truth of the matter is that a person in their twenties, just finishing university, is unlikely to think about their long-term care needs. Such a person thinks about entering the workforce and making some money. However, encouraging someone to save a little extra for the long term is always a good idea.

A great way to save while you are working is through your company’s defined contribution pension plan, and if you can afford to have an additional 1 or 2 per cent taken off your paycheque and directed straight into your pension, those voluntary savings will have long-term growth potential.

On the other hand, if you are in the later part of your working career and do not have a pool of assets to fund your retirement or the ability to address the financial ramifications of long-term care, then you really need to start making some tough decisions now. Simply put, what major financial changes are you going to make to provide the necessary resources to fund you through the later years of your life?

We only have one life and we should live it to the full. We are never promised a tomorrow; however, assuming tomorrow does come and will come for many years, it is essential that we plan our finances to provide for it.

- Carla Seely is the Vice President of Pension, Life and Investments at Freisenbruch-Meyer. If you would like any further details, please contact her at cseely@fmgroup.bm or call +1 441 297 8686.

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