Long-Term Care Insurance Just Got More Affordable
Many factors that affect your financial situation in retirement took root early in your life and are outside your control. For example, it is outside your control that, in your adult life, house prices have consistently been higher than they were a generation ago, and employers have been less generous with benefits like retirement accounts and pensions. Likewise, you cannot control whether your parents have retirement savings of their own or whether they rely on you as a source of financial support. You can decide what to do with the resources you acquire during your career. If you have an employer-provided 401(k) account, you can avoid financial instability in retirement by avoiding several common mistakes. One common mistake is withdrawing money early from your 401(k) account. Early withdrawals normally incur hefty penalties, so by withdrawing money now, you are diminishing your retirement savings by more than the amount of the withdrawal. Another common mistake is not buying long-term care insurance. For help making wise choices that will enable you to avoid messing up your plans for a 401(k)-funded retirement, contact a Dade City estate planning lawyer.
People in Their 50s Can Withdraw Money From Their 401(k) Accounts Penalty Free to Buy Long-Term Care Insurance
Long-term care insurance is one of the best investments you can make for your retirement, but you would be surprised to find out how many people do not have it. Medicare pays for brief hospital stays and, by generous estimate, a few months of nursing home care over a lifetime, which means that seniors are responsible for paying for most of their long-term care some other way. No matter how much money you have saved for long-term care expenses, your long-term care will cost more than you think it will. Long-term care expenses are the main cause of people’s 401(k) accounts running out of money during the person’s lifetime. If this happens while you are in a nursing home, your only choice is to apply for Medicaid, which will be devastating to your estate during probate.
Meanwhile, if you have long-term care insurance, it will pay for your residence in a nursing home or assisted living facility for as long as you need them, and some policies will even pay for care by home health aides. The policies cost several thousand dollars per year, but consider that a month of residence in an assisted living facility costs more than a yearly premium for a long-term care insurance policy. Insurers will only write long-term care insurance policies if you are healthy and younger than 60 when you buy them. Therefore, a new law recently went into effect that enables employees in their 50s to withdraw up to $2,600 per year from their 401(k) accounts to pay for long-term care insurance.
Contact a Florida Estate Planning Attorney About Long-Term Care Insurance
An estate planning attorney can help you prepare an estate plan that accounts for the costs of long-term care. Contact The Law Office of Laurie R. Chane in Dade City, Florida to discuss your case.
Source:
cnbc.com/2025/12/30/early-401k-withdrawals-ltc-insurance.html
