Long-term care is often overlooked, and the costs are underestimated in retirement planning. On top of that, long-term care expenses are growing every year. The possibility of needing help taking care of yourself later in life is probably hard to imagine and most likely not on your priority list. However, if you forget to add this to your planning, you might run out of your retirement savings before you know it.

Why is it important to plan for long-term care?

70% of people older than 65 will need some long-term care in their life ( This shows that you likely need some care later in life, so be worry-free and prepare for it.

Ask yourself the following question;
If you need long-term care, how will you pay for it, or who will pay for it?

What about health insurance and Medicare?

Your regular health insurance or Medicare won’t cover long-term costs. Medicaid can help cover long-term care costs if your income is within the Medicaid income limits. Only having Medicaid may limit your choices of where you can receive your care and the type of care. This stresses the importance of planning long-term care costs as early as possible to ensure you get care in your desired location.

 Costs of care overview for 2022:

  • in-home homemaker services: $53,768.
  • In-home health aide: $54,912.
  • Community adult day care: $19,240,.
  • Community assisted living facility: $51,600.
  • Nursing home semi-private room: $93,075.
  • Nursing home private room: $105,850.

    *source median cost survey Genworth 2022

Please plan and be ready in case you need it

There are different ways to prepare for these costs, and they all have ups and downs. We will discuss five options.

Option 1: Long-term care insurance

The safest option is long-term care insurance. There are two reasons why people buy long-term care insurance.
To protect their retirement savings.
To have more freedom to pick the type of long-term care they want.

What does long-term care insurance cover?

Long-term care insurance not only covers the basic routine daily activities, like bathing, dressing, or getting in and out of bed, but it will also cover in case of a chronic medical condition, a disability, or a disorder.

  • Your home.
  • An assisted living facility.
  • An adult daycare senior
  • Hospice care.
  • Memory care.
  • Nursing home care.

The downside is that you may never use it, and your policy price could increase in the future.

The price of a policy can be based on the following:

  • Age: the younger you are, the lower your premium will be.
  • The maximum a policy pays per day
  • The maximum number of years a policy will pay
  • Optional benefits, such as inflation protection

Option 2: Living benefits (life insurance)

You can use your accelerated death benefit from your permanent/whole life insurance policy. This means you can use a portion of your death benefit to pay for long-term or other medical costs while alive. The amount you use will be subtracted from your beneficiaries’ total death benefit when you pass away.

On the downside, policies could be limited. It is essential to review your policy to figure out what it includes and if you maybe need to add riders to your policy.

for example 

  •  Check if the accelerated death benefit will increase your premium or if it is included in your premium.
  • Check The triggers you need to get your accelerated death benefit approved. A common trigger is having a terminal illness. Check the triggers you can use for the accelerated death benefit.

Another option is adding a long-term care policy to your life insurance. This is called a hybrid life insurance long-term care policy.

Option 3: Retirement Savings

Some people end up using their retirement savings; this removes the risk of paying for something they might never use. The downside, it could leave your significant other with financial hardship, or you could run out of money.

Option 4: Your family, friends, or go fund me

Most people who forget to plan for long-term care have to use their retirement savings or rely on friends and family.  64% rely on the help of their family. (, September 2016)

You might think I will figure it out once I need long-term care, but you will likely be too late to qualify for long-term care insurance and too late to save up for it. This leaves you to ask your family for help, take out loans or start a go fund me.

This makes it unpredictable; you will depend on other people and won’t guarantee that you will get the care you need.

Option 5: Annuities

Some annuities are put in place to create a passive income stream that you can use for anything, including your long-term care costs. You will most likely have to pay a one-time lump sum, and in return, the insurer will provide a stream of income for a certain period or the rest of your life. This stream could fluctuate or be stable depending on which type of annuity you choose. Annuities can be bought at any time of your life, but you will need to have a certain amount of money to invest, and there might be a waiting period before you start receiving payments.

Planning for long-term care can be tricky, but it is crucial. Feel free to schedule a meeting with one of our licensed financial planners if you need help creating a plan for long-term care or retirement. Identifying goals and objectives is critical to a successful retirement.