60 and Facing a Terminal Diagnosis: How Will I Afford Care?
Preparing for Retirement with Uncertainty
Retirement planning is a long-term endeavor that many people focus on throughout their careers. However, life can be unpredictable, and sometimes unexpected events like illness can force individuals to rethink their retirement plans. For those facing a life-changing diagnosis, it's essential to consider alternative strategies to protect their financial future.
Dawn’s Situation
Dawn, who is 60 years old, was diagnosed with amyotrophic lateral sclerosis (ALS), a progressive neurological disease. She had planned to work until she turned 65, but her condition may limit her ability to continue working for much longer. With $800,000 in retirement savings and an annual income of $120,000, Dawn is now looking for ways to adjust her financial strategy to ensure her family's stability.
Her short-term plan is to keep working as long as possible to save more. However, the progression of ALS is unpredictable, and she may not have as much time as she hopes. When the disease leads to paralysis, she will need in-home care or a facility, which could significantly impact her finances.
Social Security and Medicare Benefits
Once Dawn stops working, she will likely qualify for Medicare and Social Security Disability Insurance (SSDI). If she can work until she turns 62, she may also be eligible to receive early Social Security retirement benefits. However, taking these benefits early means receiving smaller monthly payments. It might still be beneficial for her to take early withdrawals if needed, given her circumstances.
Her husband, who is the primary caregiver, may also qualify for benefits if he is over 62. This is something the couple should explore, even if they opt for professional caregiving services.
Understanding Medicare and Medicaid
Because of her ALS diagnosis, Dawn will become eligible for Medicare as soon as she qualifies for disability benefits. Typically, beneficiaries are enrolled in Medicare two years after becoming disabled, but this rule does not apply to individuals with ALS.
Medicare covers hospital care, doctor visits, home-based services, durable medical equipment, and some outpatient care. However, it comes with deductibles and premiums. Dawn can also consider Medicare Advantage plans, which offer additional benefits such as vision, hearing, dental, and fitness programs, as well as coverage for transportation to medical appointments and home health aides.
Additionally, she may be eligible for Medigap coverage, which helps cover costs not covered by original Medicare. Eligibility for Medicaid, a needs-based program, depends on her income and resources. While she may not qualify now, she should understand the eligibility requirements in case she becomes eligible after retiring.
Additional Support Options
Dawn should also check if she has long-term disability and life insurance policies through her employer. These policies may provide financial support after a diagnosis of a life-threatening illness.
Community programs and charities, such as the Les Turner ALS Foundation, may help with the cost of assistive devices like wheelchairs and van modifications. Additionally, Supplemental Security Income (SSI) provides monthly payments for individuals with limited income, and Dawn may be eligible for these payments after retirement.
Managing Retirement Savings
Dawn and her husband must make important decisions about how to allocate their retirement savings. Since they are close to retirement, moving the majority of their investments into low-risk accounts should be a priority. However, if her husband plans to continue working for another decade, keeping a portion of their savings in higher-risk investments could potentially generate better returns.
Consulting a financial advisor can help them make informed decisions about their funds. They should also consider setting aside a significant portion of their savings in a liquid account to cover medical expenses as Dawn's condition progresses.
Planning for the Future
It's also crucial for Dawn and her husband to consult an elder care attorney to plan for her transition. This professional can help ensure that her end-of-life wishes are clearly documented, including legal documents like a will and any trusts she may want to establish.
By carefully considering all available options and making strategic financial decisions, Dawn can better navigate the challenges of her situation and secure a stable future for herself and her family.