I just retired but my wife, 62, has been diagnosed with a serious illness and may need long-term care. What do we do?

While more boomers are working beyond their 65th birthday and many will live to 85 or beyond, not all will spend their final years in good health.

Picture Dave, 66, and his wife Susan, 62 — diligent savers who have six months of emergency savings in a high-yield account along with an impressive $2-million nest egg in 401(k)s, which they hoped to draw down at a comfortable 4% annually, or $6,700 a month in their golden years.

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They’ve planned for everything … except Susan’s recent MS diagnosis.

Susan hoped to work a few more years, but her deteriorating condition means she must stop working sooner than expected. Dave already retired, and gets $2,000 a month in Social Security payments.

Dave knows he’ll need help caregiving, but that’s an expensive proposition: a home care aide costs an average $6,483 per month.

But the price tag for long-term care is even higher: an average $9,277 per month (or $111,324 a year) for a semi-private room, according to CareScout (1).

That kind of outlay would drain the couples’ 401(k)s in 18 years, when Susan is 80 and Dave 84, the very time they would both need more support.

No wonder they’re anxious. Here are some options to consider.

Covering costs now while planning for the future

While they didn’t anticipate Susan’s diagnosis, Dave and Susan are in a good position to deal with their current needs, thanks to their emergency fund.

There are additional ways the couple can improve their outlook to support Susan’s care in the near term.

Read more: Are you richer than you think? Here are 5 clear signs you’re punching way above the average American’s wealth

She may qualify for long-term disability (LTD) and life insurance coverage through her current employer. If she does, she could consider applying for benefits immediately.

As Susan can no longer work due to disability, she can retire early and start collecting Social Security Disability Insurance (SSDI).

While she can collect LTD and SSDI at the same time, SSDI benefits will reduce her LTD coverage if she has any. But it may help put them in a better financial position (2).

Meanwhile, as her primary caregiver, Dave may qualify for Social Security Family benefits.

Story Continues

In a few years, when Susan reaches retirement age, her SSDI will convert to Social Security benefits. At that point, she’ll also be eligible for Medicare.

Medicare eligibility

It will take two years before Susan qualifies for Medicare, but that will open up significant support, covering hospital care, mobility aids and care by physicians and other practitioners. It may also cover occasional nursing, physiotherapy and occupational therapy at home as well.

It does not cover long-term care, nor does it stretch to cover the cost of a home health aide to deal with activities of daily life, something that would help Susan and Dave live with dignity and greater independence.

If the couple opt for Medicare Advantage, in which a private insurer administers Susan’s plan, she will also enjoy coverage for vision, hearing and dental care and fitness programs.

She may also be eligible for Medicare supplemental insurance, or Medigap coverage from private companies, but the rules and type of coverage available differ depending on the state.

Long-term care insurance

As Medicare won’t cover Susan’s long-term care, they could try to purchase long-term care insurance, but the premiums may be high since Susan already has a diagnosis (4).

The couple can check out LongTermCare.gov for information and links to resources in their community. Look for your local non-profit area agency on aging (AAA), an organization that can provide overall guidance and support at both local and regional levels.

Bring in the experts

In an interview with MarketWatch, Phillip Battin, president and CEO of Ambassador Wealth Management, said a couple in Dave and Susan’s position should consult a financial advisor who is experienced in elder care (3).

The advisor could work with a geriatric care manager to help the couple understand all their options and the relative costs associated with them. Such an advisor could also address difficult questions like Susan’s life expectancy to help the couple make realistic financial decisions.

Battin also recommended looping in an estate or elder law attorney to discuss health directives, power of attorney and wills — and “assess how future costs may impact your legacy.”

Kristen Ahlenius, certified financial planner and director of education and advice at Your Money Line told MarketWatch that a couple like Dave and Susan must prepare for another scenario: Dave’s death.

“Who’s the backup for your wife’s care?” she asked. “How will your assets or benefits transition to support her?”

Ahlenius stressed that a certified financial planner can offer a strategy that provides security and adaptability as life changes. Dave and Susan’s dilemma is increasingly common as the number of older Americans grows.

One way to reduce the financial hit of medical care later in life is investing in a health savings account that lets you set aside pre-tax money for qualified medical expenses.

This can be an excellent savings vehicle for medical issues you’ll encounter in retirement.

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

CareScout (1); Riemer Hess (2); Marketwatch (3); National Association of Insurance Commissioners (4)

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