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Who will care for you?
Who will care for you if an injury or medical incident limits your ability to care for yourself long-term?
Planning For The Future
Long-Term Care Planning
Preparing for the possibility of long-term care can help protect your financial security, your retirement plans, and the people you love. Understanding your options today can make it easier to prepare for tomorrow.
Why LTC Planning Matters
Prepare for care without leaving your future behind.
Many people fail to plan for the possibility of needing long-term care. Yet long-term care can have a significant impact on financial security and quality of life, as well as on loved ones who may provide care.
According to the educational material provided for this page, 70% of adults age 65 and older will require long-term care at some point.
The goal is not to predict exactly what will happen. It is to understand the possibilities and consider how long-term care could fit into your overall retirement plan.
Your retirement plan should account for the years ahead.
Education • Preparation • Protection
Start With Three Questions
What would your long-term care plan look like?
Thinking through these questions can help you better understand the role long-term care may play in your retirement and financial planning.
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How would you pay for care?
How would you pay for long-term care should you need it? Consider where the money would come from and how those costs could affect your retirement savings.
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Where do you envision living?
When you look at retirement, where do you envision living? Long-term care can be provided in different settings depending on an individual's needs.
Understanding Long-Term Care
What is long-term care?
Long-term care refers to services provided to people who are unable to perform basic activities of daily living. These activities can include:
Bathing or showering
Dressing
Getting in and out of bed or a chair
Walking
Eating
Using the toilet
Where can long-term care be provided?
Long-term care can be provided in several different settings, depending on the individual's needs and circumstances.
At Home
In the Community
Assisted Living Facility
Nursing Home
Understanding Medicare
Medicare and most health insurance, including Medicare Supplement insurance, do not pay for long-term care. Medicare may cover certain types of care that are sometimes confused with long-term care, including some in-home care, hospice care, and short stays at skilled nursing facilities, subject to limits and restrictions.
The Financial Impact
Long-Term Care Can Be Expensive
Long-term care costs can affect more than the person receiving care. Family members who provide care may also experience financial and career consequences.
40%
Financial Security
Of caregivers say their care-related responsibilities negatively impact their household's financial security.
2×
Layoff Risk
Caregivers are two times more likely to experience a layoff compared with non-caregivers.
20%
Career Impact
Say their caregiving responsibilities have limited their career growth or job opportunities.
Caregiving can carry an out-of-pocket cost.
The provided educational material reports an average annual out-of-pocket expenditure of $7,242 for a family caregiver, representing approximately 26% of the family caregiver's salary.
Protecting What You Have Built
LTC Planning Can Help Preserve Your Assets
Once Medicare and private insurance benefits are exhausted, individuals may be responsible for the full cost of care. Planning ahead can help you think through how those expenses could fit into your overall financial picture.
The Cost Can Extend Beyond Healthcare
Most long-term care is not medical care. The need for ongoing assistance can create expenses that may affect savings, retirement income, and assets accumulated over many years.
The provided material also notes that many people may spend down income or assets before qualifying for Medicaid, the nation's main public health insurance program for people with low income.
Think About the People Providing Care
Long-term care planning is also about the people who may be called upon to provide care. Family members can experience financial, career, and personal impacts when caregiving responsibilities become part of their lives.
- Household financial security may be affected.
- Career growth or job opportunities may be limited.
- Caregiving can create significant out-of-pocket expenses.
Planning Options
Make Sure Your Retirement Plan Includes LTC Planning
The right approach depends on your individual circumstances. The educational material provided identifies several options that may be considered when building a long-term care strategy.
Purchase an LTC Insurance Plan
This can include hybrid life insurance and long-term care policies. The provided material notes that rates are largely based on individual health and tend to increase as people age.
Consider Transferring Life Insurance Cash Value
Cash value from a life insurance policy may potentially be transferred to an LTC or hybrid insurance policy.
Explore an LTC Annuity
An LTC annuity can create a fund specifically intended for long-term care expenses.
Use an HSA
A health savings account may be used for qualifying LTC insurance premiums and certain out-of-pocket expenses associated with receiving medical care.
Explore Employer Group Plans
Some employers offer group long-term care plans, and many group plans may not require health history.
Consider a Life Settlement
A life insurance policy may potentially be sold to a life settlement provider in exchange for a cash payout.
Set Aside Additional Savings
Another approach identified in the material is setting aside additional money in savings or investing through accounts such as 401(k)s or IRAs.
Evaluate Existing Assets
Funds may potentially be withdrawn from an asset when the tax consequences are not too detrimental.
Start planning early when possible.
The provided material notes that because rates are largely based on individual health, which tends to decline with age, starting earlier may result in lower premiums.
Start The Conversation
Don't Wait Until Care Is Needed to Start Planning.
Long-term care planning is one part of preparing for the years ahead. A conversation can help you understand the considerations and options that may apply to your situation.
Start the ConversationThis page is intended solely for general educational purposes and the content is developed from sources believed to be providing accurate information. The information is not intended as tax or legal advice and is not a recommendation to buy, sell, or roll over any asset, adopt a financial strategy, or use a particular account type.
Consumers should consult with their tax or legal advisor regarding their individual situations before making any legal or tax-related decisions.
Educational statistics and statements on this page are based on the sources referenced in the provided long-term care educational material.