“If you fail to plan, you plan to fail” – Benjamin Franklin
Considering your long-term health care needs is an important element of estate planning that is often overlooked. Factoring in the cost of an enduring illness or multiple illnesses and setting aside enough money for adequate care are only a few of the health-related estate expenses that can incur in old age. Taking the time to carefully think about the quality of life you expect and the directives you would like family and doctors to follow can give you peace of mind today and ensure your wishes are followed – not only that, this kind of preparation makes sense financially.
So, what does it mean to adequately prepare for potential health issues when it comes to estate planning? And how exactly does one do that? Hopefully, these points below provide useful guidance.
1. Start Early
Thinking about how your health will be in the future, especially far into the future, can seem counterproductive, after all, who knows how healthy one will be ten or twenty years from now?
We, of course, all hope to live vibrant lives as we age. However, the reality is that many of us will have health issues as we grow older. Some of these may impact our ability to make sound financial decisions. Consider, for example, that rates of early onset Alzheimer’s and dementia are both on the rise, with more people under the age of 65 being diagnosed each year. It’s estimated that by 2050, more than 16 million Americans aged 65 and over will suffer from Alzheimer’s. It is also the 6th leading cause of death, attributed to more deaths than breast and prostate cancer combined.
Planning early is especially important when it comes to dementia and Alzheimer’s because both diseases slowly strip a patient of their memory and faculty, two factors that are instrumental in estate planning.
2. Set Aside Enough
We are all aware that health care can be expensive, especially when considering the cost of medication, nursing homes, care centers and retirement communities. While most estate plans do cover some of these costs, they often fail to include the cost of inflation and/or increased cost of living.
How much money you’ll need for health-related expenses generally depends on when you retire, how long you live, your state of health, and the cost of medical care in your area. With the cost of health care steadily rising, including enough funds to cover the roughly 5 percent annual inflation rate will prepare you to handle the increased cost of care in the future.
Factoring in variables like cost of living increases, increases in health care costs, and similar factors also highlights just how important it is to work with estate planning professionals who are well versed in addressing these points.
3. Plan To Live Longer
Here’s the good news: global life expectancy is on the rise and currently is at 71.4 years. In North America, however, age expectancy is 81 and climbing annually. While living longer is great news for all of us, it does put increased strain on our finances, especially during our golden years.
Setting aside enough funds to last the rest of your life is crucial to maintaining quality of life and being able to afford any health related expenses that arise. This can be achieved by figuring out monthly expenses, projected health costs, life expectancy and the rate of inflation. Don’t forget to leave some cushion room for unforeseeable expenses.