With Americans living longer than ever, how should families plan for their future caregiving needs? TODAY financial editor Jean Chatzky discussed options during a Facebook chat on Wednesday.
Some key questions from the Facebook chat below:
Q. Can you retire if you have 2 million in savings at age 55? — Tanya Fraioli
JC: That depends on how long you live -- and how you live! Think about it this way: There has been a lot of work done showing that if you pull no more than 4% out of your retirement accounts a year, your money will last for 30 years. On 2 million, that means you're starting by pulling out $80,000. Can you live on that? Can you live on that plus Social Security when you begin taking that? The answer of course, depends on your lifestyle and whether you're planning the sort of retirement where you'll continue to earn money.
Q. My financial advisor is recommending a Lincoln Moneyguard life insurance policy with a Long Term Care rider. This seems like a good way to not lose the money put aside for long term care if you do not use it. Any thoughts? -- Pat Hackbarth
JC: More and more insurers are rolling out policies with return of premium riders/guarantees. And yes, I think they deserve a good look. Of course the hope is that this is one form of insurance (like home, auto, disability) that you'll never have to use. Getting some of your money back (or your premium minus gains) is particularly attractive if you want to cover your bases and still leave money to your kids.
Q. Is it okay to use your paid off home as long term care versus buying a policy? I feel the value of my home will take care of me. I do live in a great real estate market. Thanks Jean. — Ann Kosewicz Kennedy
JC: It's not the same as cash, unfortunately. That's something we learned when we went through the housing crisis. But if you feel there's enough value in it to fund your care AND provide you with a place to live, you could be okay.