Healthcare costs for anyone are rising ever higher each year. The increased costs for long term care is becoming frightening for even moderately financially stable couples and individuals approaching retirement years. Older individuals are also more likely to desire to age in place in their comfortable homes these days.
The unexpected high costs of skilled nursing care, longer term rehabilitation costs and the prices of necessary medications each month makes it seem almost impossible to plan ahead to ensure relative comfort during those golden years seniors have worked hard to enjoy.
There are some wise moves that seniors or their caregivers can use to fund the necessary healthcare needed after retirement. Talking about the state of your elderly parent’s finances is a conversation better had sooner than later. There are ways to fund your future long term care costs that everyone should consider.
How to Use Your 401k to Pay for In-Home Care
A 401k or IRA fund is a retirement plan that many employers offer to employees that can save money to be used after retirement. These employer sponsored retirement plans may include a variety of different investment options such as bonds, stocks and cash equivalents that still allow for diversification with the added bonus potential of generating a much higher return amount than standard saving’s accounts or CD’s – Certificates of Deposits. This is especially true when the average national interest rates are low like they have been lately.
Typically, most retirement savings plans place a high monetary tax penalty if funds are taken out too early. Even though 401k or IRA accounts cannot be guaranteed, most individuals earn a nice sum due to the long-term capital appreciation with significant tax deferrals. There are some ways in which individuals can access their retirement funds early that can free up cash flow when needed.
The Benefits of Utilizing an Experienced Elder Law Attorney
Speaking with an experienced elder law attorney can offer clients valuable legal advice about protecting assets, determining taxable income, possibility of a 401k payment, options in care insurance and more. This generation of seniors just reaching retirement age will not be able to rely solely on social security benefits during their retirement years like the previous generation did.
A seasoned attorney that specializes in elder law can give seniors important 401k help in setting up appropriate IRA withdrawals that will then be used solely to pay for long term healthcare costs. These withdrawals will increase the senior’s taxable income, but the usual tax benefit deduction usually transforms this money into a health savings account that is then tax free.
Advantages of Setting Up a 401k Mortgage or 401k Payout Plan
Many seniors who want to preserve their assets wonder about reverse mortgages and similar financial plans. When someone enters into most skilled nursing home facilities, the retirement home can take all but $50 a month from the retiree’s social security check. More seniors today are taking advantage of lower interest and penalty reverse mortgage loans to use their money for healthcare or other retirement expenses.
Middle aged adults often take their saved retirement pay for paying off their high interest rate mortgage or student loan obligations. Lots of homeowners are also taking out reverse mortgages on their homes to live more comfortably in their later years. These types of plans often allow the homeowner to stay in their home until they die. Some will also include the lifetime of a spouse to remain in the house for added peace-of-mind.
Can I Claim a Hardship Withdrawal from My 401k Retirement Plan to Pay My Mortgage or Healthcare Bills?
Many 401k or IRA retirement plans include a hardship withdrawal clause that the individual can access. While the 401k payout will be subject to income tax laws, the withdrawal amount does not need to be paid back if the person is eligible.
Individuals are urged to