Planning, Saving Needed For Golden Years

How much money is enough to take you comfortably through the so-called golden years?

No one knows. But the answer could be a lot of money, especially if you need any level of assisted living or nursing home care.

And, as in most situations where a substantial unplanned expense is a possibility, there’s insurance available.

While long-term care insurance isn’t new, some companies have added coverage for popular alternatives to nursing homes, such as assisted living facilities and in-home care.

The key to making smooth transitions from working life to retirement to an assisted living community is planning and saving money.

First, let’s talk money.

Advisers say that financially, the later years need to be set up in midlife.

Unless we win the lottery, we need to invest sizable amounts of cash in our 30s and 40s. Relatively few of us can merely save enough money to retire, which means our savings must be invested and managed for growth.

Money invested in our 30s, for example, can grow to an astounding amount by our 60s and 70s, when we will need it to retire.

The real push to save significantly comes in our 40s and 50s, when presumably peak earning coincides with at least a flattening or reduction of major household expenses, such as completion of college educations or a move to a smaller house or condo.

But according to national surveys, baby boomers, now in their 40s and 50s, have either given up even trying to stockpile the money needed for retirement or are confused about how much money they will need.

Among boomers, two in 10 have less than $10,000 in a retirement account, according to a recent survey by the National Center for Women and Retirement Research. And two-thirds have less than $50,000. Researchers say that isn’t enough for boomers to retire on at anywhere near their present standard of living, much less fund an assisted living situation.

That’s where insurance comes in.

Spokane attorney Alan Rubens tells his clients in their 40s and 50s to start considering long-term care insurance.

“You can buy it fairly economically in your 40s and early 50s. The pricing is lower because the risk to the insurance company is lower,” says Rubens, who specializes in estate and tax planning.

“If you go in at age 65 or 70 the prices are higher because there is a better chance the company will have to pay.”

As with life insurance, the cost of policies varies, depending on factors such as your age and how many months the policy will pay for nursing home care or assisted living.

Because the field of long-term care insurance is changing to address different levels of assisted living, having a professional review the policy is a good idea.

An attorney skilled in estate planning can do this. Or seniors can turn to a state-sanctioned group: Aging and Long Term Care of Eastern Washington or the state Insurance Commissioner’s office.

In January, Washington state passed the strictest rules in the country covering specifics of long-term care policies that can be sold in this state. Between 35 and 40 companies have policies approved by the Washington Insurance Commissioner’s Office.

Sometimes, though, insurance policies that sound great prove to be inadequate. While the policies are complex and offerings vary, here are a few aspects to consider:

The elimination period. How long are you in a facility before the policy kicks in? The longer the elimination period (the time spent in the nursing home before the policy starts paying), the less expensive the policy.

How much per day will the policy pay, and does it have escalation clauses? This is important for those buying a policy at age 50 since no one knows how much daily costs will be 20 years from now. If you are younger than 75 and can afford it, buy a policy that includes inflation protection.

How long will the policy pay? Some policies, for example, will pay for three years in a facility. Others cover a lifetime. The lifetime policy will cost more. Some people play the odds, specifically the statistic that most people live in a nursing home less than two years.

, DataTimes ILLUSTRATION: Graphic: Life expectancy

The following fields overflowed: BYLINE = Susan English Staff writer Staff writer Paul Turner contributed to this report.