Funding Long-Term Care

A long-term care event can have a drastic impact on a family’s finances, so it is important to plan for this possibility in retirement.  The type of long-term care needed, duration, location, and many other factors will vary from person to person.  Here are a few important statistics to consider:


  • Someone turning 65 today has almost a 70% change of needing some type of long-term care service
  • Women 3.7 years & men average 2.2 years of care need
  • 20% will need care for longer than 5 years
  • Average annual cost for a private room in a nursing home is $92,000
  • Average annual cost for assisted living care is $43,500


What are some potential options to cover this cost?


  1. Self-insure. Utilize resources that you have accumulated to pay for any long-term care expenses out of pocket.   If you or your spouse remain healthy & never have a long-term care event, you retain 100% of your assets.  However, you also assume 100% of the risk.  Funds can quickly be depleted if one spouse needs care, leaving the remaining spouse vulnerable to running out of retirement funds.
  2. Traditional long-term care insurance. Also known as “stand-alone LTC insurance”.  These policies provide a daily long-term care benefit for a specified time period.  The coverage is “use it or lose it”, meaning you only access the benefit if you have a covered long-term care need.  Traditional LTC insurance has become more expensive and difficult to obtain in recent years, leading many to pursue alternative options.
  3. Life Insurance with a long-term care rider. A long-term care rider is designed to tap the death benefit of a permanent policy to help defray the cost of long-term care needs.  Any remaining death benefit will be paid to the beneficiaries of the policy at death of the insured.  There are many options available to design a policy to suit your specific needs.
  4. Annuity with long-term care benefits. Annuities can be designed with enhanced benefits for long-term care needs.  Some offer a multiplier than can increase the contract value for qualified long-term care expenses.  Any remaining contract value can be passed to beneficiaries as a death benefit.  Underwriting eligibility is typically less restrictive than for life insurance, making it a potential alternative for those with health concerns.


Talk to a financial professional.

Each person’s situation is unique, and there is no one-size-fits-all solution for funding long-term care expenses.  A fiduciary financial advisor can review your options and design a solution to fit your needs.



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