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Kelly Ruggles is the author of "The Financial Playbook" for Retirement.
Kelly C. Ruggles, Financial Planner and Educator

Articles by Kelly Ruggles        Back to Article Main Page

June, 2007
The Shag Carpet Dilemma:
Should Long Term Care be Considered in Your Financial Plan?

The milkman returned from his trip aboard the orange Braniff airline.  Hours before touch down, he cured his hunger with a well-cooked meal in coach seating.  Even so, he could not wait for his wife’s dinner back home.

After picking up his turquoise colored, hard-shell suitcase, he jumped into his Yugo car for a drive down the highway.  He stopped off at the local gas station and the station’s attendants rushed to his service.  They cleaned his windows, checked his tire pressure and oil pressure, topped off his gas tank, and wished him a friendly goodbye.

Long Term Care Insurance should not be ignored because of its potential to ruin your life savings.  According to the Citizens for Long Term Care (CLTC), “Long term care in America is a predictable need for nearly half the country’s population.” 
When he arrived home, his family greeted him at the door with hugs and kisses.  The milkman knew this was a happy time; he could tell by the dark blue color of his mood ring.

“What’d you a get us!  What’d you get us!” the six children cried as they anticipated gifts from a distant place.

“Pop rocks,” he answered.  “But don’t eat them with coke, they could explode in your mouth.”

He removed his penny loafers, the ones that matched his blue polyester leisure suit, before he entered the home and stepped upon the groovy shag carpet.  He asked his wife to turn down the volume of her 8-Track tape player so he could watch one of four television stations.  As he waited for the television to “warm up,” he bid hello to his pet rocks then sat upon his easy chair to watch the children play.

“What’s that you’re playing with?” he asked one child.

“Don’t be such a square dad, this is cabbage patch doll.”

Her comment reminded him of his most recent investment.  He turned to his wife and proclaimed, “Honey, our future is now secure.  I have purchased five “Tickle Me Elmo” toys.”  She smiled with the reassurance only a wife could give.

His wife placed a TV tray table before him and then served dinner.  As he looked upon the oven-cooked TV dinner he jokingly asked, “Where’s the beef?”  The entire family laughed at his reference to a popular television commercial.

His attention soon turned to the television as shallow voices and a blurry image slowly resurrected from an audio/visual nap.  The milkman then instructed his coonskin cap wearing son to adjust the set of rabbit ear antennas. 

“A little to the left, now back, stop!  That’s perfect.”  The child walked away and the reception immediately scrambled.  “Come back, please.  Just stand there for a moment and hold the rabbit ears.  Thank you, I’ll let you know when you can let go.”

Consumer trends can be funny and amusing.  Fads come and go with the times, perhaps repeating the trend decades later.  It is the shag carpet dilemma we face during our life that may result changes.  Should the consumer adjust and upgrade the product or should he/she keep it as is.

There is one trend that seems to be gaining momentum and must be addressed.  It is one that should not be ignored because of its potential to ruin your life savings.  According to the Citizens for Long Term Care (CLTC), “Long term care in America is a predictable need for nearly half the country’s population.” 

Do you need long term care coverage?  Your financial plan should, at the very least, include a conversation with your financial planner to discuss your unique needs and situation.  The reason?  After years of saving for retirement, the cost for assisted living could devastate your net worth. 

Long term care insurance policies can be complicated, but generally refers to coverage for medical and other services to maintain specific living arrangements, for a specific period of time, for a person in a deteriorated health condition where self-insurance, government programs, and standard health insurance policies do not cover the necessary expenses.  Such care may include assistance with dressing, bathing, preparing meals, taking medications, and other daily activities.  According to the American Health Care Association, the cost of long term care could exceed $50,000 annually or more than $4000 per month.  Factor inflation into the numbers and the costs quickly accelerate.  For example, with a 5% annual inflation rate, the costs could amount to more than $132,000 twenty years from now.

The list of options available with long term care coverage is lengthy, but the following summary is a good start for anyone considering a policy. 

After reviewing the availability of non-qualified and qualified policies, the consumer should consider the daily amount necessary for care.   States differ in their average facility costs, therefore it is highly recommended you request an analysis from your financial planner.

How long should the benefits last?  This is a question unique to everyone and requires a lot of thought.  When reviewing the length of benefits, keep in mind the following:  According to the Agency for Health Care Policy and Research (AHCPR), approximately twenty percent of facility users will spend five or more years in long term care arrangements (Kemper and Murtaugh, 1991).

Language in a policy refers to the “elimination period.”  Similar to a deductible, the elimination period is the length of time before benefits begin to cover expenses.  It is the period when YOU pick up the costs.  Policies often allow for elimination periods of zero to ninety days.  Remember, the shorter your elimination period, the more likely you are to pay higher premiums. Choose the period that best meets your financial situation.

Keep in mind, your policy will also refer to activities of daily living (ADL’s).  The ADL’s define when you are entitled to receive benefits. 

The topic of long term care is complicated and detailed.  In addition to the topics above, it is also necessary for you to understand cognitive impairments such as Alzheimer’s, inflation protection options, possible discounts for good health, waiver of premium options, and pay period options.

If this is your first time to review the topic of long term care, you should know that volumes of information remain at the next meeting with your financial planner.  And remember, unlike the shag carpet dilemma of the fad conscious milk man, your health and preservation of wealth is no passing matter.

About the Author:  Wardlaw's belief is that familiar life elements best illustrate practical investment strategies; not typical investment jargon. With that philosophy, the author assists financial planners/advisors, brokerage firms, periodicals, and other investment information syndicates create informative and entertaining articles. For comments and questions, please contact the author at or



©2007, Kelly C. Ruggles | Sitemap | Disclosure
Kelly C. Ruggles, President of American Reliance Group, Inc., is a registered investment advisor. Mr. Ruggles is the author of "The Financial Playbook" for Retirement.

Mr Ruggles does not intend to provide personalized investment advice through this publication and does not represent that the strategies or services discussed are suitable for any investor. Investors should consult with their financial advisors prior to making any investment decisions.