Is Long-Term Care Really Built Into Your Retirement Plan?
A few summers ago, our family was together in Chelan celebrating my dad’s 70th birthday. Photos like this have a way of reminding you how quickly time goes by, and how much the people and moments we love really matter.
Moments like this are a reminder of what planning for the future is really about. It’s not just numbers on a statement or how much you’ve saved for retirement. It’s about protecting the life you’ve built, the people you love, and the choices you want to have as you get older.
Most of us spend years talking about retirement. How much should we save? When can we retire? How much can we safely spend each month? Will our investments last?
There is another question that deserves a place in this conversation.
What happens to the plan if you need long-term care? Many people assume they will simply use their own assets if care is ever needed. For some families, self-funding may absolutely be part of the plan. But there is an important distinction-
“We have enough money” is not the same as having a clearly defined long-term care strategy.
A thoughtful plan considers the assumptions, costs, and choices that may come into play if care is ever needed. If long-term care is already part of your retirement planning conversations, here are a few questions worth reviewing with your financial advisor.
1- How Many Years of Care Are We Planning For?
Long-term care can include much more than nursing home care. It may mean help in your own home, assisted living, memory care, adult day services, or skilled nursing care. There is no way to know exactly how long any one person may need care, but retirement projections often include assumptions future expenses.
Ask Your Financial Advisor- “How many years of long-term care are we considering in our retirement plan?” and “What would the plan look like if care lasted longer than expected?”
The goal is not to predict the future perfectly, but to simply understand what your current plan is designed to handle.
2- What Monthly Cost of Care Are We Using?
The cost of long-term care can vary significantly based on where you live and the type of care you receive. Home care may look very different financially from assisted living. Memory care can often change the numbers even more.
Ask Your Financial Advisor- “What monthly cost of care are we using in our retirement projections?”
Then discuss whether that number reflects your location, your preferences, and the type of care you may want. Understanding the assumptions behind the plan can make future decisions easier.
3- What Inflation Rate Are We Assuming?
If you are planning decades ahead, today’s cost of care may not be the number that ultimately matters. The more important question is - What could that same care cost when you are 70, 80, or 85? Even modest increases compounded over time can substantially change the amount of money needed.
Ask Your Financial Advisor- “What inflation rate are we using for long-term care expenses?”
It can also be helpful to look at projected costs at different ages so you can see how those assumptions may affect the overall retirement plan.
4- How Much of Our Retirement Portfolio Could Be Used for Care?
If self-funding is part of your strategy, it is worth understanding how a long-term care event could affect the rest of your retirement plan.
Ask Your Financial Advisor- “How much of our retirement assets could realistically be used for long-term care while still protecting the rest of our retirement goals?”
Then consider what happens if one spouse needs care while the other spouse is still living independently. How much income does the healthy spouse still need? What lifestyle does the plan need to support? What other financial goals should remain protected?
Self-funding can make sense for some families. The important thing in understanding how it fits within the broader plan.
5- What Happens If the Market is Down When I Need Care?
This is an important part of the conversation because long-term care does not necessarily begin during a strong market. Imagine needing to withdraw thousands of dollars each month for care while your investment portfolio is experiencing a significant downturn. That could affect the timing and source withdrawals.
Ask Your Financial Advisor- “How would our retirement strategy adjust if I needed long-term care during a major market decline?”
A thoughtful plan considers not only how much money is available, but also when those assets may need to be accessed.
6- Where Would the Money Come From?
If you needed care tomorrow, which assets would likely be used first? Your IRA, 401k, brokerage account, savings, home equity? Different assets can have different tax implications and may play different roles in your retirement income strategy.
Ask Your Financial Advisor- Which assets would we likely use first if I needed long-term care?” and “Are there tax considerations we should be thinking about?” This can better help you understand the full financial impact of a future care event.
7- How Could a Long-Term Care Event Affect My Spouse and Family?
Long-term care planning is not only about protecting assets, it is also about protecting choices. Without a plan, a spouse or adult children may suddenly be faced with decisions about caregiving, housing, finances, and day to day support.
Ask Your Financial Advisor- “If I need care, what could our current plan require from my spouse or children?” That question can be just as important as any financial projection. Because a good long-term care strategy considers both the financial impact and the impact on the people you love.
Self-Funding Can Be a Plan- But It Should Be Intentional There is no single long-term care strategy that is right for everyone. Some families may choose to self-fund. Some may choose to transfer part of the risk through insurance. Others may use a combination of the two. The important thing is understanding the strategy before care is needed. These are valuable conversations to have while you still have choices.
One Question to Start the Conversation The next time you meet with your financial advisor start with one question- “Can we review how long-term care is accounted for in my retirement plan?”
Then look at the assumptions and numbers together. If that conversation raises additional questions about insurance options, a long-term care specialist can work alongside you and your financial advisor to explore what may fit within your overall retirement strategy.
At DeWaard Insurance, my role is not to replace your financial advisor. It is to provide specialized education around long-term care insurance and help you understand the options available so you and your advisor can make informed decisions together.
Long-term care planning is not about assuming the worst.
Tracy DeWaard
Long-term care planning is personal. Insurance availability, benefits, tax treatment, and suitability vary based on individual circumstances. This information is intended for educational purposes and is not tax, legal, or investment advice.