Consider long-term care insurance. “Stuff happens,†says Baker. “I don’t think they will be in a position to adequately self-insure. As a result they should look into getting long-term care coverage.†If either or both of them need long-term care, the cost could be a huge retirement disruptor. Long-term care insurance provides an option that prevents them from depleting their assets. According to Genworth Financial, the average cost for a private room in a nursing home is $222 per day and $200 for a semi-private room. In Rineyville, a one-year stay in a nursing home with a private room currently costs about $68,000.
Take the entrepreneurial leap. Patricia wants to open a real estate brokerage seven years before she retires. “This is an area where Patricia has experience. In spite of what we have seen in the last few years, there is an opportunity for capital appreciation and income generation. I think her goal of acquiring seven properties over the next three to five years is realistic,†says Baker. However, “there is always the possibility that they buy property that falls in value or can’t generate net positive cash flow.†Baker says, “Patricia should allocate the $1,500 they have left over at the end of each month toward savings to cover emergency needs first and then as a source of capital for their business ventures.â€
Leave a legacy. “I think they should consider instruments to include a trust and/or family partnerships,†says Baker. “If they follow through with their plans to have at least two businesses, this would make a lot of sense to explore.†Based on their current situation, they don’t need to do any additional saving for the purposes of a legacy. They also have life insurance in place. Overall, says Baker, from foreclosure to where they are today, “they are in a wonderful position.â€