Why long-term care planning matters for your financial future
When we think about financial planning, we often focus on building wealth, saving for retirement, and leaving a legacy. But one of the most overlooked (and potentially costly) areas of planning is long-term care. Long-term care (LTC) isn’t just about nursing homes. It includes a wide range of services that support people who can no longer perform basic activities of daily living on their own, such as bathing, dressing, or eating. And it’s not just for the very elderly; an unexpected illness or accident can create a need for care at any age.
As a financial planner, I’ve seen how thoughtful preparation for long-term care can make a profound difference not just financially, but emotionally for individuals and their families. Here’s what you need to know—and why planning early can make all the difference.
Long-Term Care is more common (and pricey!) than you think. The reality is, most Americans will need some form of long-term care in their lifetime. According to the U.S. Department of Health and Human Services, about 70% of people over age 65 will need LTC at some point. And it’s expensive. In-home care can cost $5,000 or more per month. Assisted living facilities and nursing homes can cost even more, especially in high-cost-of-living areas. Without a plan, these costs can quickly erode retirement savings.
Start the conversation early. Long-term care is a sensitive topic, but it’s best to address it before the need arises. Ask yourself (and your loved ones):
- Who would provide care if needed?
- Where would you prefer to receive care: in your home, a facility, or with family?
- How would you pay for it?
- The earlier you begin this discussion, the more options you'll have.
Know your options. There’s no one-size-fits-all solution, but here are a few of the most common strategies:
- Self-Funding: Some clients choose to earmark a portion of their portfolio to cover potential care costs. This requires significant assets and discipline.
- Traditional Long-Term Care Insurance: These policies reimburse you for eligible care costs but have become more expensive and harder to qualify for over the years.
- Hybrid Policies: These combine life insurance or annuities with long-term care benefits. If care is never needed, the policy pays a death benefit or return of premium, which many people find more appealing.
- Health Savings Accounts (HSAs): For those with high-deductible health plans, HSAs offer a tax-advantaged way to save for qualified long-term care expenses.
- Estate & Legal Planning: Durable powers of attorney, healthcare directives, and trust structures can ensure your wishes are honored and your assets are protected if you’re unable to make decisions later on.
Don’t wait for a crisis. Planning ahead means more control, more choices, and less stress. When a long-term care event happens suddenly, families often find themselves scrambling—emotionally overwhelmed and financially unprepared.The best time to plan is when you don’t need it. Whether you’re in your 40s or already retired, it’s not too early or too late to explore your options.
If you’d like to talk through what this might look like for you and/or your family, we’re here to help.