While many plan for retirement, few consider the costs of long-term care. Beyond arranging care through tools such as a Lasting Power of Attorney (LPA), Advance Care Planning (ACP), or Advance Medical Directive (AMD), it is equally important to plan financially to ensure sufficient resources to support your care needs.
Care costs can vary depending on the type and level of care. They may include:
- Nursing home or hospice care
- Medical treatments and medications
- Mobility aids and equipment
- Caregiver salaries or professional care services
- Daily living expenses such as food, utilities, and rent
- Costs for visiting or accompanying family members
- Hiring a domestic helper
- Transportation and travel costs
Planning for care costs involves five key stages:
1. Setting Aside Your Funds
Start early by automating savings through insurance, investments, or dedicated care accounts. Building a long-term financial base ensures resources are ready before care needs arise.
2. Growing Your Funds
Insurance policies, critical illness plans, long-term care supplements, or endowment plans can provide lump-sum payouts or regular income streams to supplement and cover care expenses.
3. Protecting Your Funds
Safeguard your assets from misuse, mismanagement, legal disputes, or bankruptcy during your lifetime. Using trusts and agreements can ensure that funds are preserved for your intended care. Such means can effectively create a “Second Financial Life” for later years or periods of illness.
4. Accessing Your Funds
Funds intended for your care should be easy to access securely. Appointing a professional trustee can allow money to be disbursed efficiently according to your wishes, while minimizing the risk of misuse or fraud.
5. Utilizing Funds Effectively
Effective use of funds goes beyond spending. It ensures resources are spent wisely and sustainably for medical care, nursing and hospice, and living expenses.
Funds can continue to grow while being used, through structured payouts and professionally managed investments. This approach ensures resources last, supports care needs, and reduces stress on caregivers.
Take having a LPA for example, you may appoint a loved one as your donee for welfare while appointing a professional trustee to manage your finances, ensuring disbursement and investment of the funds.
A recent article shared that caregivers of individuals with severe dementia may face median costs of S$4,081 per month, including medical expenses, transport, supplies and equipment, domestic or professional caregivers, respite care, home modifications, and loss of income due to caregiving responsibilities.
“Whenever there is a financial burden, it just makes the caregiving so much more difficult,” says Jason Foo, CEO of Dementia Singapore.
Planning for sufficient funds, rather than just the minimum, ensures that your care needs are fully met without creating financial strain for your loved ones. Financial preparation ensures that you gain access to the care you wish to have, reduce stress for your loved ones, and maintain dignity and comfort throughout life’s later stages.
Reach out to us if you have any enquiries. We’ll be glad to guide you through the process.