It’s so easy to dream of everything we want to have and do later on in life that we sometimes fail to consider whether we can afford to fulfill them or not. When you’re enjoying financial security today, you’re probably not too worried about money in the future. After all, you’re collecting paychecks regularly from your work.
Time, however, doesn’t stop for anyone. Everyone will eventually grow old. And it’s only natural for aging to introduce new hurdles in just about every part of your life, including your work, health, and daily activities. Will you be able to maintain the same performance down the line?
It’s worth mentioning that life expectancy in the Philippines is rising year-on-year, with it reportedly reaching 71.28 years old in 2020. Senior citizens currently account for about 8.2 percent of the country’s population, and surveys suggest that that number is expected to go up in the next decade and a half. So chances are you can expect to live well beyond the normal retirement age of 60 to 65 years old.
The question is: How financially prepared are you for the so-called “golden years” of your life?
This is where insurance comes in, long-term care insurance, to be specific. Insurance coverage provides a safety net for your wealth and protects you from many of life’s unforeseen risks. Long-term care insurance is no exception, but there’s actually more to it than that.
What is long-term care insurance?
It’s normal for our physical and mental health to decline as we age. The pace of which might differ from person to person, but it’s inevitable for it to eventually happen to everyone. That’s why it’s important for you to plan ahead, so that you can ensure you can continue to live a comfortable life in the future.
The biggest concern usually is health. When you reach those “golden years,” there’s just no getting around health problems and emergencies. Add to that that you may no longer be eligible for health insurance, with HMOs only covering members up to 65 years old. If an HMO does accommodate seniors beyond the age of eligibility, you can expect rates to be very expensive. While you can pay for these expenses out-of-pocket, the last thing you want when you’re retired and no longer earning an income is debt.
Long-term care insurance can help with that. It’s a long-term insurance policy designed to cover any sort of care you might need after retirement. These include stay-in nursing facilities, elderly care, and other types of personal support.
But similar to disability insurance, this type of insurance is not readily available locally.
If you think about it, the concept of long-term care insurance is more geared towards the Western setting, where seniors tend to live on their own or with others of their age in nursing homes. In a lot of cases, these people have no one to call when they need help, which makes some sort of support fund necessary.
It’s not the same here in the Philippines, where it’s quite common for children belonging to Filipino and Filipino-Chinese households to continue to live with and take care of their parents, even after marriage. Despite this, having some form of long-term care insurance is still very much needed.
Regardless if you choose to live with your family or not after retirement, you’ll certainly still want to maintain some form of financial independence; you’ll want to be able to pay for your own expenses; and you’ll want to grow old with dignity.
You might be thinking, “I should be fine since I have a lot of assets under my name.” However, you have to remember that assets are not only non-income generating but can also be liabilities. What’s most important is that you know for sure you’ll have a guaranteed lifetime income after you retire, which covers all your spending needs.
How do you do that?
The great thing is if you save for it now while you’re healthy and have a sound mind, you can easily enjoy a stress-free retirement. There are, of course, a number of ways you can save, but the most efficient way is arguably through self-insuring methods, which involves you funding your own plan instead of buying it from an insurer.
You might be absorbing some of the risks that you typically pass to the insurance company, but this method allows for a more customized, cost-efficient and flexible coverage. One such way you can self-insure for your post-retirement needs is via mutual funds.
Mutual funds are mainly investment instruments, but they can also double as a savings fund, where your money can grow through dividends and interest earned over a period of time. And when the time comes that you’ll be needing that money, you can withdraw from there.
These can be purchased directly from an asset management company like Sun Life Asset Management Co., Inc. (SLAMCI) through a Certified Investment Solicitor. It requires a certain amount of planning so it’s best to consult a professional about how to go about this.
Retirement is just the beginning of the next part of your life; it’s not the end. So it’s not something that you should lose sleep over. But it’s something that you definitely need to plan ahead for. Remember, as with most things in life, being practical with your financial decisions pays. Doing so ensures that nothing gets in the way of securing the lifestyle you want in the future and finally being able to fully enjoy everything life has to offer.
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