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After a lifetime of accumulating
money for a comfortable retirement, it would be a bitter pill
to swallow if your plans were dashed because you or your spouse
incurred high nursing-care bills. Yet the risk is real. There
is a 49 percent possibility that you or your spouse will enter
a nursing home after age 65.
If you believe that paying $148,000
per year for nursing-home care (the estimated cost in 2020) would
be difficult or maybe even impossible, consider these options.
Options to Insure
Resources for Extended Care
A long-term-care (LTC) insurance
policy can be used to help offset expenses stemming from custodial
care in your home or round-the-clock care in a skilled nursing
facility. The appropriate policy can go a long way toward protecting
your financial situation from unexpected LTC expenses. |
LTC Insurance: Compare the top companies, and
get the best quote for your needs.
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Fixed Annuity
With a fixed annuity, an individual
pays a premium either in a lump sum or over a period of time
to an insurance company that agrees to pay a fixed return in
the future. Keep in mind that most annuities have surrender charges
that are assessed during the early years of the contract if the
contract owner surrenders the annuity. Withdrawals other than
periodic payments are fully taxable to the extent that they exceed
contributions. In addition, withdrawals before age 59 ½
may be subject to a 10 percent federal income tax penalty. The
guarantees of fixed annuity contracts are contingent on the claims-paying
ability of the issuing insurance company. Contract owners can
leave the money in the account until they need it for LTC expenses
or any other reason. If it is never tapped, the money can be
left to heirs.
Roth IRA
One way a Roth IRA differs from
other retirement accumulation vehicles is that withdrawals are
not required to begin when the owner reaches a certain age. The
account is funded with after-tax money, and qualified withdrawals
of earnings are free of federal income tax. Remember, to qualify
for the tax-free and penalty-free withdrawal of earnings, a Roth
IRA must be in place for at least five tax years and the distribution
must take place after age 59 ½ or due to death, disability,
or a first-time home purchase (up to a $10,000 lifetime maximum).
The money can be used to help pay for LTC or emergency expenses,
or for other reasons.
See Long - Term - Treatment Insurance for the
complete article. |
