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How a Long Term Care Event Could Affect Your Retirement Savings

Insights & Ideas Team •  February 4, 2015 | Your Finances

Twenty years ago, Meryl Comer and her husband, Harvey, were in the prime of their lives when he was diagnosed with early-onset Alzheimer’s. The news was a staggering blow to their plans for the future. “He was 56. I was in my 40s. We both had good jobs. We were saving. We had portfolios. We had that golden dream for retirement. And then you get blindsided.”

Not long after his diagnosis, Harvey was forced to quit working; soon Meryl would cut her hours from full time to part time to care for her husband. Eventually, she quit her job to become his primary caregiver. “We went from a two-income household to a no-income household, and in the first year we went through $100,000 in out-of-pocket expenses,” said Comer. “That’s frightening. Nobody has that kind of money.”

The financial consequences of a long-term care event can be overwhelming, yet a recent survey conducted by Northwestern Mutual found that two in five adults across the U.S. are either unsure of how they will handle long-term care or do not plan to address their potential long-term care needs. That same survey also validated one of the most widely held misconceptions about the funding of long-term care, according to Steve Sperka, Northwestern Mutual vice president of disability and long-term care. “In our survey, 43 percent of the people surveyed believed that long-term care expenses are covered by Medicare, Medicaid or private health insurance,” he said. “And, most often, that’s not the case.”

So, what’s the potential impact of a long-term care event on your retirement income plan? In Northwestern Mutual’s recent webcast The Retirement Wild Card That Can Derail Your Plan, Sperka uses a hypothetical scenario to illustrate the impact.

To view the entire webcast, click here.

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