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Retirement and Medicaid planning are linked

As many New Jersey residents approach retirement, their financial goals shift from those held in previous stages of their lives. Instead of considering how to budget for raising a family and purchasing a home, older Americans have to think about how they will fund the final stages of their lives, when working is often no longer possible. To that end, older people should take the time to think about how Medicaid planning factors into their overall retirement plan.

The two matters may seem unrelated at first glance. Retirement planning focuses on amassing enough wealth to sustain an individual or couple through their later years. Medicaid planning, on the other hand, centers on planning the distribution of wealth that allows one to be eligible for this government program. On the one hand, wealth is sought while on the other a solution is needed to move these assets into other vehicles.

Medicaid becomes a factor when an older person requires residential care. The cost of such care is often prohibitive, and can exceed $5,000 per month, which is far less than the average retired person needs to live comfortably on their own. In order to qualify for Medicaid coverage, an individual and family has to "spend down" their own assets to reach certain thresholds. Knowing the best way to protect assets and still qualify can be tricky, and a misstep can leave a family unable to meet the needs of an aging loved one.

There are a number of ways to disperse assets within the family and make it possible to qualify for Medicaid. Through the judicious use of trusts, gifting and other tactics, it is possible to qualify for government aid while sustaining the family's financial health. However, it is important to devise the proper plan and to execute Medicaid planning within the boundaries of New Jersey law.  

Source: benzinga.com, "Between Retirement And Estate Planning, Don't Forget This Potential Pothole", Rebecca Sheppard, Feb. 9, 2015

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