Long-Term Care Planning: A Vital Part of Retirement Strategy

Long-Term Care Planning: A Vital Part of Retirement Strategy

Why Long-Term Care Planning Matters

When planning for retirement, most people focus on income, travel, and lifestyle – this is the fun stuff!  But one of the most critical—and often less fun to think about components—is long-term care (LTC) planning.

According to the U.S. Department of Health and Human Services, 70% of Americans turning 65 will need some form of long-term care.¹ Without a plan, families may face:

• Financial strain from rising care costs
• Limited care options due to lack of resources
• Emotional stress on loved ones who may need to step in as caregivers

Long-Term Care Costs Are Rising

Based on the 2024 Genworth Cost of Care Survey, here is what families can expect to pay annually:

• Home health aide: $77,800
• Homemaker services: $75,500
• Assisted living facility: $70,800
• Nursing home (semi-private room): $111,325
• Nursing home (private room): $127,750

These costs are increasing each year, making early planning essential.

Long-Term Care Usage Statistics

To understand the scope of LTC needs, consider these statistics:

• 48% of seniors will require paid LTC services¹
• 24% will need paid care for more than two years¹
• 15% will spend over two years in a nursing home¹
• Average duration of care:
• Women: 3.7 years¹
• Men: 2.2 years¹
• Average LTC cost: $138,000²
• Only 7 million Americans currently have LTC insurance³

Exploring Long-Term Care Insurance Options

Traditional LTC Insurance

These policies cover services such as home care, assisted living, and nursing homes. You select the benefit amount, duration, and waiting period. While premiums can be high, they offer strong protection.⁴ 

However, with:

• Predetermined daily or monthly benefit limits
• Pre-set, lifetime caps
• Higher premiums for women
• Changing benefits after years of premium payments

This kind of protection has limitations and can be expensive:

Hybrid Life Insurance

Hybrid policies combine life insurance with LTC benefits. If care is needed, the policy pays out. If not, your beneficiaries receive a death benefit.⁵

Example: A 60-year-old woman investing $100,000 in a hybrid policy could receive:

• Up to $607,000 in LTC benefits
• $189,000 death benefit if care is never needed⁶

Annuities with Long Term Care Riders

Hybrid life insurance will require you to submit to underwriting, meaning those with underlying health conditions may find premiums expensive if the policy is even obtainable.  However, purchasing an annuity with a long-term care rider can provide an account that grows over time, provides enhanced income in the event of disability and will still provide an inheritance if the account balance has not been depleted to support you during your retirement.

Self-Insured / Self-Funding Options

Of course, there is always the option to pay for long-term care from your savings and investments. However, many retirees are surprised to learn that they may not qualify for Medicare or other assistance until their hard-earned assets have been spent down to minimal levels – potentially greatly reducing assets for surviving spouses or heirs.

How to Build LTC Costs into Your Retirement Plan

1. Assess your risk: Consider health history and lifestyle.
2. Estimate future costs: Use a Cost of Care Calculator.
3. Explore insurance options: Compare traditional and hybrid policies.
4. Create a reserve: Allocate part of your portfolio for care expenses.
5. Review regularly: Update your plan as life circumstances change.
6. Don’t Ignore your Estate Plan: Any long-term care plan should be integrated with your estate plan.

Final Thoughts: Why LTC Planning Is Essential

Long-term care planning is more than finances—it is about freedom, dignity, and peace of mind. Whether you choose to self-insure, purchase a policy, or build a reserve, the key is to start early.

At Auctum Wealth, we help families navigate these decisions with clarity and compassion.

^{SEC Registered Advisor: Investment Advisory Services are offered through Integrated Advisors Network, LLC (Integrated), an SEC-registered investment advisor. Registration does not imply a certain level of skill or training. Integrated Advisors Network, PO Box 25523, Dallas TX 75225, 855-729-4222, www.integratedadvisorsnetwork.com.}

1 Morning Star, March 29, 2023

2 Consumer Affairs, February 6, 2024

3 Retirement Living: Journal of Retirement Research, May 20, 2025

4 Kiplinger, August 4, 2025

5 Forbes, October 27, 2023

6 Compare Long Term Care, June 7, 2025