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Don’t Bet The Farm

“Betting the farm” is a phrase that describes going all in on a bet, betting the entire amount you have.  Most sane, reasonable people would never do that, or would they?

We adapt to risks our entire lives.  We may go to a casino, but rarely bet our house, limiting our wagers to a couple of dollars or rolls of quarters so as not to lose more than we can afford.  When we bought our first car we realized the risk of an accident wiping out our future income for many years and purchased auto insurance, even though it was expensive.  When we bought a house the bank required homeowners insurance in case of a storm or fire so we paid several hundred dollars a year so we would not lose the $150,000 house.  Our health is insured and even our income is insured through Social Security.  Once we get to 65 Medicare covers most of our health costs.

But as we age, there comes a point when we may no longer be able to manage on our own.  Arthritis, brittle bones, stroke, dementia, or a host of other things unfortunately do happen to us, our friends, and our neighbors.  Many of us think we will get the help we need from our children.  We forget about all the running two parents do with soccer practice, band camp, school functions, etc. , and the fact they may not live nearby.

For most people, that is when we investigate commercially available help, either in our home or in a facility of some sort.  The assisted living facilities popular now are wonderful places, many have pools, hot tubs, and even happy hour once a week.  But how many of us can afford to withdraw an additional $3000 to $4000 a month from our retirement savings for very long?  Nursing homes cost twice as much as assisted living.

Once care is needed it’s too late to get insurance for it.  We have, in effect, bet the farm.  There may be no other choice than to pay for the care we absolutely must have.  Liquidating assets can be terribly expensive.  A farm, duplex, business, land that we aquired long ago has appreciated.  Selling it may trigger capital gains taxes and realtor’s fees besides the fact that a forced sale rarely gets the best possible price.  Any asset we own that has significantly appreciated is subject to severe shrinkage.   And then we spend it down.  At $2000 of assets we can apply for government Medicaid to pay the bills, but not before.  A spouse at home can keep a little, but that is taken later by the government too.  We bet the farm – and lost.

It doesn’t have to be this way.  If we planned ahead like we did with the auto, homeowners, and other insurances and investigated long term care (LTC) insurance while we are still in good health and mobile, we could have traded a couple hundred dollars a month to get thousands a month just when needed to pay for the care we need when we can no longer manage on our own.

Which will you do?  Hope for the best, plan on help from the children, bet the farm?  Or plan ahead while you still can?  Call TheLongTermCareGuy.com at (920) 884-3030 or (800) 219-9203 to start investigating.   While you still have that option.

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The Long Term Care Guy