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In the 1960’s, while still in their 20’s, The Rolling Stones sang “What a drag it is getting old” and The Who sang “I hope I die before I get old”.  When they first sang those songs, I’m sure neither group dreamed they’d still be performing on stage in their 70’s.  I also saw life from a different perspective when I was 25 but it has changed now that I’m 44 and I watch my parents and their friends going through health issues.

Part of getting older is making sure you’re prepared for the unknowns that life throws your way.  Most of the time that means identifying the risks you haven’t planned for and mitigating those risks.  That may mean for your investment portfolio, your home, your retirement income, your health, and your life.

What happens if you’re trying to eliminate a risk and you’ve found out you’ve waited too long?  For example, your current health problems keep you from qualifying for health insurance. I experienced one of these situations first hand and I’m hoping you can learn from my family’s misfortune.

About 8 years ago I spoke with my mom about long-term care insurance.  After meeting with her and her CPA she decided that it was a good idea and we should go ahead and apply.  I told her that she’d be receiving a call from the insurance company and they’d ask her a series of questions.

A couple of weeks later I received an email from the insurance company stating that she’d been denied coverage.  I was outraged and immediately dialed them up.  She was in great shape physically and I couldn’t imagine why she had been denied.

Everything came crashing down on me when the nice woman at the insurance company told me that Mom had been denied because she was irate with the person that called her on the phone – she had no idea why the insurance company would be calling or what it was all about.  So they denied her.  Because part of qualifying for long term care is a memory test and she failed miserably.

And now my sister and I knew something was wrong with Mom.  Suffice it to say, my mother was diagnosed with Alzheimer’s.  And she didn’t have long term care.  So she began “self funding” her long term care with her retirement assets.  We began with in-home care which she had a hard time tolerating and when the subject of 24 hour care became necessary my sister and I knew she would be extremely agitated with someone staying with her through the night.  So we had to make the hardest decision of our adult lives – putting Mom into assisted living.  We did lots of research and found a facility in town that we thought would be a good fit.  And so the spending escalated. She starting off spending about $7,000 per month; as her disease and her need for care have increased, so have her monthly expenses.  They’re currently around $9,000 per month.  She’s been in assisted living for 6 years and has spent nearly $600,000 of her retirement savings.

Failing to plan early enough can cost you dearly.  We don’t like thinking about these negative aspects of life and yet we really should.  There are lots of articles written about the ins and outs of long term care so I won’t labor that issue.  What I will tell you is that now there are more innovative ways to get long term care than ever before and you should have a professional review these options with you.  Make sure your consultant has access to a variety of solutions and not just one carrier.  The volatile markets and crazy headlines have kept lots of money in money markets and CDs earning close to nothing.  One thing you can do is deploy some of that capital to properly mitigate your risk of needing long term care.  And it’s never too early, because in spite of what Mick Jagger sang in 1964, time is not on our side.