Steve and Carol, both in their 50s, always wanted to retire at an early age. They knew how much they needed to save to maintain their lifestyle during retirement. In fact, Steve and Carol were great savers who maxed out their 401(k) and catch-up contributions each year. They even opened HSAs to use for health expenses during retirement.
The couple consulted a Bordeaux advisor to confirm they were on track and their retirement plan was sound. After several in-depth meetings, their advisor understood the couple’s goals and concerns. She discovered Steve’s parents both passed away in their late 60s due to illnesses that ran in his family, including dementia and Alzheimer’s. Therefore, Steve was considerably at a higher risk of developing these same conditions. Although Steve and Carol were steadfast savers, they did not realize the detrimental impact healthcare costs could have on their liquid assets if one of them became sick.
Their Bordeaux advisor asked if they had considered long-term care insurance and explained that this form of insurance can help alleviate the financial burden by covering some costs related to long-term care. Previously, both Steve and Carol thought spending money on insurance premiums was a waste if they were funding their HSAs every year. Since they were in good health, why would they start paying for long-term care now? The advisor educated them on the benefits of applying at a younger age including a higher likelihood of getting approved in the underwriting process and potentially cheaper premium payments.
Using a detailed cash flow analysis, the advisor showed how an illness, such as Alzheimer’s, could impact their retirement plan. The analysis showed their portfolio depleting rapidly. The advisor then completed a second analysis incorporating annual premium payments for long-term care insurance. While not a guaranteed result, under this scenario, the likelihood of their assets depleting in their lifetime was less than 5%. Although long-term care insurance carries a cost, there are situations when it can serve a meaningful purpose in a couple’s portfolio.
Steve and Carol found peace of mind in knowing they had a plan in place and could enjoy a secure and fulfilling retirement.
