A Retirement Plan Includes Long Term Care
Long-term care is one of the most unpredictable and emotionally charged aspects of retirement planning.
It’s also one of the most frequently overlooked, either because it’s uncomfortable to think about or because many people assume it won’t apply to them. But the truth is, nearly 70% of people over age 65 will require some form of long-term care during their lives. Some may need only minimal support to age in place at home; others may spend years in assisted living or memory care. And many – more than half – won’t require formal care at all.
So how do you plan for something so uncertain and varied?
There’s No One-Size-Fits-All Solution
Long-term care planning is as personal as your retirement goals. It’s shaped by your health history, financial resources, family situation, and values. While we can’t predict exactly what your future will hold, we can prepare for a range of possibilities so that your financial security – and your family’s well-being – remains intact.
Step 1: Educate Yourself
Start by learning what long-term care includes. It’s not just nursing homes. It also covers:
- Home health care services
- Adult day care
- Assisted living communities
- Skilled nursing facilities
- Memory care units
Each comes with very different costs, depending on location and level of care required. A helpful resource to explore current cost estimates is Genworth’s Cost of Care tool: Genworth Cost of Care. It allows you to view and compare costs by state and type of service.
Step 2: Talk Through Your Preferences
Once you understand the range of care options, have a thoughtful conversation with your spouse or family. Do you want to age at home if possible? Would you be open to moving into a senior community? What role might adult children or other caregivers play?
Your personal values and family dynamics should help guide your choices and shape how you prepare financially.
Step 3: Consider Your Funding Options
There are several strategies to fund long-term care, and each has its own pros, cons, and trade-offs:
- Self-Pay
Using your savings, investment assets, or home equity (via sale, HELOC, or reverse mortgage) to cover care costs. This provides flexibility but can drain your assets quickly if care is needed long-term.
- Traditional Long-Term Care Insurance
These policies pay a daily or monthly benefit for a set number of years once a qualifying health event occurs. While premiums can rise, they provide a dedicated funding source.
- Hybrid Life Insurance with LTC Riders
These life insurance policies allow you to access part of the death benefit during your lifetime to pay for care. They offer value whether you need long-term care or not, and unused benefits go to heirs.
- Annuities with LTC Enhancements
Some income annuities offer double-income benefits if you meet certain health criteria. These solutions may suit individuals who want guaranteed income now but want some long-term care protection later.
Which path is best? That depends on your total retirement income, net worth, health status, and how much risk you’re comfortable retaining.
Step 4: Review Your Estate Plan
Long-term care planning should be part of a broader conversation about legacy and estate planning. Make sure your:
- Will is up to date
- Durable Power of Attorney and healthcare directives are in place
- Trusts are properly structured (if applicable)
- Family understands your wishes
This ensures not only that your assets are protected but also that someone you trust can make decisions if you can’t.
Step 5: Consult a Professional
This is not a DIY project. Long-term care planning involves financial, legal, and emotional complexities. A qualified financial planner – ideally working alongside an elder law or estate planning attorney – can help you evaluate your options and make informed choices tailored to your unique needs.
Step 6: Revisit Your Plan Regularly
Your health, assets, and goals will change over time, so revisit your plan every few years. Are your funding sources still appropriate? Have costs changed? Have your personal or family circumstances shifted?
Planning for long-term care is one of the hardest parts of retirement because the need is so uncertain. You might never require care, or you might need it for a decade. But doing nothing and hoping for the best isn’t a plan. The key is to prepare for multiple possible outcomes, knowing that the true measure of a plan’s success may only be revealed in hindsight.
A little preparation now can mean peace of mind later – not just for you, but for the people who love and care for you. That makes the work more than worthwhile.
