Personal Savings
Many individuals use their personal savings, investments, pensions, and other assets
and income sources to fund long term care. Because long term care is expensive,
this may be a viable option only for those with above-average financial resources
who’ve planned long in advance of the need for care. Even then, if you need specialized
or long-lasting care, a large amount of personal savings may be necessary.
To set up a savings program, start with a monthly budget and allocate a certain
percentage each month to your savings. This will require self-discipline but you’ll
quickly see the results of your work. Talk to a financial planner for more ideas
about building your savings. Use our retirement savings and retirement budget worksheets
for planning.
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Advantages |
Disadvantages |
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If it turns out that you don't need long term care, your money is still yours to
spend, invest, or leave to your heirs.
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Because you don’t know how much long term care you’ll need or how much it’ll cost,
you might not save enough money to pay for all of it.
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If you set aside enough money for your long term care needs, you can choose where
and how you receive care.
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There may be rules about when and how you can use your investments. In some cases,
you may have to pay a penalty for withdrawing money.
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You don't have to worry about qualifying for a long term care insurance policy or
purchasing a long term care policy that you may never use.
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If you need extensive long term care, you might run out of money and find yourself
unable to medically qualify for insurance.
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You don’t have to worry about age or health screening or requirements.
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Saving requires discipline over an extended period of time. Each month or year,
you will need to make sure you put away your planned amount.
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