Advice on Using Your IRA to Pay for LT Care – DON’T

Advice on Using Your IRA to Pay for LT Care – DON’T

We’ve reported frequently on the high cost of long-term healthcare and ways to go about funding it.

Unfortunately, many people are vulnerable and are anxiously searching for solutions to fund LT care. Most people have the lion’s share of their retirement assets in IRA or 401(k) pretax accounts and plan to use them to fund LT care needs. Our featured author has some straightforward advice on the matter: don’t do it.

The reason is simple: taxes. If the need arises to take a large withdrawal from one of your pretax accounts, the funds instantly become taxable and the rates on major withdrawals, our author warns, can be shockingly high.

Our expert, Bradly White of Epstein and White Retirement Income Solutions, thinks people should consider three basic facts. First, Medicare will take care of basic healthcare expenses, but cannot be relied on to fund LT care. You’ll need to provide for those expenses yourself. Second, LT care can be administered by a range of facilities or even at your home – educate yourself on the options. Finally, you’ll need to consider the cost of all the options and prepare to fund what you’ll need.

Mr. White wants to issue a wake up call. If you haven’t saved anything for retirement, then you’ll have to depend on Medicare. If you’re very wealthy, the resources are likely in place to provide LT care at a high level. For those in the middle – the majority of the population the fact remains that most of them (70%, according to a government estimate) will eventually need LT care.

All About Asset-Based Long Term Care
Everything you need to know about Asset-Based Long Term Care products.

 

If you’re still working, diversify your savings away from basic pretax accounts, White suggests. In some situations, purchasing LT healthcare insurance can make good sense. In any case, consultations with professional advisors are in order.

For more information, please read:
Thinking of Paying for Long-Term Care from Your IRA? Think Again. | Kiplingers

 

Get Personal: How Advisors Can Help Clients Face Life’s Transitions Advisors Dislike Real Estate, But a New Platform May Help