$800,000 nest egg earns a very con-
servative 6 percent, that would mean
$48,000 a year in proceeds (also before
taxes) that he could draw on without
touching any of the principal. Accord-
ing to the Bureau of Labor Statistics,
the average retired family spends
$45,756 a year. His 401(k) and Social
Security would easily cover that.Yet despite Vincent’s planning, life
has thrown some curveballs at the
Martins. The biggest is that Pamela was
diagnosed with multiple sclerosis and
hasn’t been able to work for 20 years.
She draws a Social Security disability
income, around $1,500 per month, and
receives benefits from long-term dis-
ability insurance, which will disappear
when she turns 65. Vincent has been
creating an additional pool of funds,
what he calls a slush fund, to cover
both of their medical costs.
“We’re doing as well as we can to
prepare,” Vincent says. “I’ll care for her
for as long as I can in our house, but
there will come a time when she will
need at least part-time nursing care.”
Joyce Petrenchak, wealth strat-
egy regional director at PNC Wealth
Management, says that people who
are worried about rising health-carecosts should look into long-term care
policies. The catch, however, is that
these plans may not cover preexisting
conditions, so it’s important to enroll
sooner rather than later.
Also, these policies don’t cover ev-
ery cost. The most affordable ones will
help pay for in-home assistance with
daily activities, such as bathing and
dressing. You can pay for more care,
but the “bells and whistles” you get are
less important than the peace of mind,
says Petrenchak. “These policies give
you flexibility and liquidity when you
need it,” she says.
Mindful of his own struggles to
save, Vincent has been working over-
time to support his children’s efforts.
Cherlyn Thomas, the Martins’ oldest
daughter, has her retirement savings
on autopilot. A vice president of edu-
cation services at a school in Chicago
and a single parent to 13-year-old Ja-
son, Cherlyn has a 401(k) and 403(b),
a similar tax-incentivized retirement
account. She has increased her contri-
butions twice but doesn’t keep an eye
on her investments. That’s actually a
good thing. Experts warn that obsess-
ing over investments is often counter-
productive because timing the stock
market’s highs and lows is impossible.
That said, now that she’s in her early
40s, Cherlyn realizes the value in hav-
ing a clearer picture of what’s ahead.
“I want to do better and be aware of
what’s going on with my finances,” she
says. “I know I’m going to get Social
Security benefits, but I’m not quiteLONG-TERM CARE
POLICIES GIVE
YOU LIQUIDITY WHEN
YOU NEED IT.Reader’s Digest
22 april 2019