By Brian Gordon, President of MAGA LTC.
A very common question on the subject of long term care planning is: what’s the best time to start the planning process? While the classic response is, “the sooner, the better,” some long term care specialists will tell you otherwise.
Yes, there are advantages to starting young. For example, if you are self-insuring, the sooner you start, the more you can save before you’re likely to need care.
And if you’re planning to purchase long term care insurance (LTCI), the younger you are when you apply, the lower your premiums will be. LTCI is medically underwritten, so health and age help determine cost and eligibility.
Of course, once you have protection in place, it’s there in case you need it. So, there are compelling reasons why it’s good to secure long term care protection as soon as possible. However, in terms of the big picture, it’s just not that simple.
First, Get Your Financial Ducks in a Row
While long term care planning is important, some experts point out that it’s not top priority in terms of overall financial planning. In other words, make sure you’re addressing these four high-priority areas first:
You’re Saving for Retirement
According to a recent study, more than 40% of middle-age families will run out of money during retirement. Whether you have a 401K plan through your employer or a personal IRA, make sure you have a retirement plan in place and are growing it every paycheck.
Your Credit Card Debt Is in Check
If you just have a mortgage and car payment, that’s fine. However, if you’re carrying a burden of credit card debt, pay it off first. The longer you carry it, the heavier that burden will become and the tougher it will be to pay off.
You Have a College Fund in Place (if You Have Kids)
If you have children, those college years will be here before you know it. Currently, four years of in-state public college costs $100,000+ and rising. Get that 529 plan or other college savings vehicle funded before you start thinking about long term care protection.
You Have an Emergency Fund
If something unexpected happens—say, you lose your job—do you have enough savings to support you for three months? Nearly half of Americans don’t. Experts recommend having a three-to-six month emergency fund at the ready—so get that in place first.
You’ll Know When You’re Ready for Long Term Care Planning
In summary, there is no one-size-fits-all best time to plan for long term care. Yes, younger applicants are more likely to obtain long term care insurance at lower rates. But it only makes sense to purchase LTCI when your essential financial planning is done.
When you are ready, keep in mind: every LTCI carrier has unique policies, underwriting rules, rates and discounts. If you’d like more information about long term care insurance, and if it might be a good choice for you, click here.