You have slowly, but surely built a nice nest egg. You are looking forward to a long retired life. You have a nice mix of assets, a mix of income streams, and you are confident that age 60 to end of life is well planned. Is there ONE thing which can completely destroy your retirement and make you dependent on somebody? Yes, there is.
Long Term Illness / dependence which requires nursing – Long Term Care – as it is called in the USA. Sadly India does not have Long Term Care Insurance and you will be on your own. You would be on your own and your spouse could help you. Now if you have no children, and no nephew / niece who want to help and your spouse has predeceased you, welcome to the bad, bad world.
Sounds dangerous? impractical? will not happen to you? Sure, hope not, but at least be aware of the implications…
Staying at home or in a geriatric ward of an old age home is going to get very expensive. Recently I saw the shortage of nurses in the WORLD. It is huge – especially in Europe and USA – both countries with a rapidly aging population and ability to pay well. So we are going to be competing in the international market for old age care.
I am translating this cost to about to Rs. 50,000 per person per month. So assuming you require this for about 5 years, you will require about Rs. 50,000*12*5 = Rs. 30,00,000. There is not enough data about how long you will require this – in the sense there is not generic data, so the assumption of 5 years.
This amount is largely being drawn out of your retirement corpus. Hopefully LTC insurance will be introduced in India over the next few years, but let me warn you – the premium will be really high. LTC insurance is very expensive even in USA – where it has a longer history and a much record keeping track record.
The best things that you can do is to take proper care of your health (there is nothing you can really do to prevent Parkinsons or Alzheimers except pray). Be prepared for it mentally, physically and financially. Remember if this has to happen to you and your spouse cannot manage complex financial transactions, you will be left with 2 poor options – tax inefficient too – annuities and bank fixed deposits. So you need to have a big corpus that assumes at least about 20% taxation.
What all can you really do?
- accept that some illness / disease / fall can confine you to bed
- that will involve somebody having to assist you with simple daily operations which you have been doing for 70+ years
- for women it could mean a change of how you dress
- even for men it could mean wearing a gown instead of a payjama
- institutional care could be impersonal, do not have any expectation
- your spouse may need counselling on how to cope
- you may need counselling on how to cope with the illness/ trauma care
- your children with all good intentions MAY NOT be able to help you
- we have no clue how a Reverse Mortgage amount will be treated in your hands
- Geriatric care is very difficult to find, and if you have community, caste or geographic bias, you are doomed
- your mind may be active and your body may not co-ordinate making you VERY angry with the world
- Meditation may help
- death maybe a better solution, but you could live till 97 with the illness
Sorry, I will be happy if somebody can give this a happy twist.
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