Long-Term Care: 4 Ways to Cover a Major Retirement Expense

It may not be pleasant to think about moving to an assisted living facility or requiring in-home care and support. However, that’s the situation many retirees will find themselves in, according to the U.S. Department of Health and Human Services.

The agency estimates that the average 65-year-old has a 70 percent chance of needing long-term care at some point in life. Men will need care for an average of 2.2 years, while women need care for an average of 3.7 years.1 With care often costing thousands of dollars per month, it’s easy to see how it can be a major expense in retirement.

While it’s not a guarantee that you will need care, it is a strong possibility. If you are approaching retirement or are in the early years of retirement, now may be the time to develop a strategy. How will you pay for long-term care expenses? What will the consequences be for you and your spouse if you need care and don’t have a plan in place?

Below are four common ways to cover long-term care costs. Consider implementing one or a mix of all of these funding methods as you develop your strategy.



One option is simply to pay for your own care out of pocket. However, consider that this could be a costly strategy, and it may not even be feasible for many retirees. According to Genworth Financial, the median monthly costs for long-term care in the United States in 2016 were:2

  • Adult Day Care – $1,473
  • Assisted Living Facility – $3,628
  • Homemaker Service – $3,813
  • Home Health Aide – $3,861
  • Semiprivate Room in a Nursing Home – $6,844
  • Private Room in a Nursing Home – $7,698

Again, these are medians. The costs could be higher in your area. Multiply them over many months or years, and you can see how substantial the total cost could be. Self-funding may not be feasible unless you have a significant amount of assets in retirement.


Use government funding.

Many retirees assume that Medicare covers long-term care costs. That’s usually an incorrect assumption. Medicare will temporarily cover a portion of costs in certain scenarios, usually when the care requires skilled nursing as part of a rehabilitative plan. However, Medicare often isn’t a long-term solution.

Medicaid will cover many long-term care costs, but only if you have a minimal amount of personal assets. Many people are forced to deplete their own assets before transitioning to Medicaid funding. Of course, that could be an issue if you want to preserve assets for your spouse.


Rely on family support.

You may also assume that your children or other loved ones can provide care. It is possible that they may be able to help in some areas, such as with cooking or cleaning. However, consider whether they can really provide the level of care you may need.

For instance, could your child help you move from the bedroom to the living room or wherever else you may need to go? Do you want your child to help you with bathing or using the restroom? If you have cognitive challenges, could your child abandon their personal responsibilities to provide you with nearly constant care?

It may be reasonable to expect some family support, but you might not want to make it the central component of your strategy. It’s likely that if you need care, some of it will have to be provided in a professional capacity.


Buy long-term care insurance.

If you’re still relatively healthy, you may want to look into long-term care insurance. These types of policies help cover some of the cost should you need long-term care in the future. You pay premiums today, and then—if needed—the insurance company pays for some or all of your long-term care costs.

Long-term care policies have many moving parts, allowing you to customize the policy to meet your needs and budget. Many also offer coverage for in-home care, so you don’t have to move into a facility to use the benefit. Finally, some policies are now offering death benefits for your loved ones. If you don’t use the long-term care coverage, your beneficiaries may get some of the funds back as a death benefit.

Interested in developing your long-term care strategy? We can help you find the right strategy for your needs and budget. Let’s connect soon and start the conversation.





This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16072 – 2016/9/1

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