Planning for Long-Term Care: Why Preparation Matters
April 6, 2026
Most people would rather not think about the possibility of needing long-term care later in life. Yet the statistics suggest it is an issue many families will eventually face. In the United States, someone who reaches age 65 today has roughly a 70% likelihood of requiring some form of long-term care during their remaining years. This type of care often involves assistance with everyday activities such as bathing, dressing, or eating.
The COVID-19 pandemic highlighted how demanding caregiving can be. Families across the country experienced the emotional strain, financial cost, and logistical challenges that often accompany caring for aging relatives.
So the question becomes: Are you prepared?
According to the U.S. Department of Health and Human Services, individuals who require long-term care services use them for about three years on average. While some people need care for a shorter period, others may require assistance for much longer.
Because of the potential duration and expense, long-term care represents one of the most significant risks to a retirement plan. If a serious health event occurs, the consequences extend beyond finances. Physical stress, emotional strain, and time demands can affect both the individual needing care and the family members providing it. Notably, more than half of family caregivers are also raising children under the age of 18, creating additional pressure on already busy households.
Having a strategy in place can help reduce the burden on loved ones while preserving financial stability.
Changing Patterns of Care
In past generations, it was common for families to care for elderly relatives at home. Today, however, many seniors rely on professional care services. Long-term care often begins with limited assistance—such as visits from a home health aide—but can progress to more comprehensive support, including assisted living or full-time nursing care.
As the level of care increases, so do the costs.
This reality leads to an important decision for many retirees: Should long-term care expenses be paid out of personal savings, or is insurance a better solution?
Choosing to self-fund means relying on retirement savings and investments to cover care costs if they arise. Purchasing insurance, on the other hand, requires paying premiums now in exchange for protection against potentially large expenses later.
Each approach involves trade-offs. Paying for insurance may protect assets and reduce financial risk, but the need for care is uncertain. Choosing to self-fund avoids insurance premiums, yet it exposes retirement savings to significant potential costs—especially later in life when income flexibility may be limited.
The Cost of Long-Term Care
Care expenses can vary significantly depending on the type of services required and where a person lives. National median annual costs in 2024 include:
● Homemaker services: about $75,500
● Home health aide: about $77,800
● Adult day health care: about $26,000
● Assisted living facility: about $70,800
● Nursing home (semi-private room): about $111,000
● Nursing home (private room): about $127,000
These figures illustrate why long-term care can quickly become one of the largest expenses people face in retirement.
Ways to Pay for Long-Term Care
There are generally four primary approaches to covering long-term care costs: government programs, traditional long-term care insurance, hybrid insurance products, and personal savings.
Government Programs
Some individuals may qualify for assistance through Medicaid, the Veterans Health Administration, or state-based programs. However, eligibility for Medicaid typically requires meeting strict income and asset limits, meaning it is designed primarily for individuals with limited financial resources.
It is also important to understand that Medicare does not cover long-term care services, except for limited short-term medical care following hospitalization.
Traditional Long-Term Care Insurance
Traditional long-term care insurance policies allow individuals to choose coverage levels, benefit periods, and waiting periods before benefits begin. Premiums are usually paid annually.
However, fewer insurers offer these policies today, and some contracts allow premiums to increase over time.
Hybrid Insurance Products
Hybrid solutions combine long-term care coverage with other financial products such as life insurance or annuities.
For example, a policy may provide a life insurance benefit for beneficiaries while allowing the policyholder to access that benefit during life to pay for long-term care expenses. If care is never needed, heirs still receive the death benefit.
Another variation links long-term care benefits to an annuity. The initial investment grows tax-deferred, and funds used for qualified long-term care expenses may be received tax-free.
While these hybrid solutions offer flexibility, their availability may vary depending on market conditions and insurance company offerings.
Personal Savings
Some individuals choose to cover potential care costs directly from their retirement assets. This approach provides flexibility but requires careful planning to ensure savings can support both retirement lifestyle needs and possible healthcare expenses.
Using funds from tax-deferred accounts such as IRAs or 401(k)s may also create taxable income when withdrawals are made.
Key Considerations When Evaluating Coverage
If long-term care insurance is part of your plan, several factors deserve careful thought.
When to purchase coverage:
Many people explore long-term care insurance in their 50s or early 60s. Premiums are typically lower at younger ages, and applicants are more likely to qualify before health issues develop.
Benefit eligibility:
Most policies begin paying benefits when a person cannot perform at least two activities of daily living, such as bathing, dressing, or eating. Policies also typically include an elimination period—a waiting period before benefits begin.
Coverage amount:
Policies generally provide a daily or monthly benefit that can be used to pay for services such as home care, assisted living, or nursing home care. Choosing the appropriate benefit level requires balancing protection with affordability.
Inflation protection:
Because care costs have historically risen over time, adding inflation protection may help ensure benefits maintain purchasing power in the future.
Financial strength of the insurer:
Selecting a financially stable insurance company helps ensure the provider will be able to meet its obligations decades into the future.
Tailoring a Plan to Your Situation
Long-term care planning should reflect personal circumstances. A single individual may approach coverage differently than a married couple, where one spouse’s care needs could significantly affect the other’s financial security.
Family health history is another important consideration. Conditions such as Alzheimer’s disease or diabetes may increase the likelihood of needing care later in life.
Ultimately, planning for long-term care is about balance—considering affordability, potential risks, and the type of care you would want if the need arises.
Although the decision often focuses on finances, the impact extends beyond dollars and cents. A thoughtful plan can help protect retirement savings, reduce stress on family members, and provide greater peace of mind for the future.
Sources:
https://www.fidelity.com/viewpoints/personal-finance/long-term-care-costs-options
Disclosure:
This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.
This material is provided as a courtesy and for educational purposes only.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.