There is an old saying: People don’t plan to fail — they fail to plan. That is especially true when it comes to long-term care planning. As Maria discussed in her recent caregiving blog, many families are forced into making emotional and expensive decisions during a health crisis because the proper conversations and planning were never addressed ahead of time.
One of the biggest concerns we see today is the rising cost of care. Historically, long-term care expenses have increased approximately 5%–6% annually, meaning someone in their 60s today may be shocked at what assisted living, home healthcare, or nursing care could cost twenty years from now. Unfortunately, it is not uncommon for a family to spend down a significant portion of their retirement savings — and sometimes even the equity in their home — caring for one spouse, and then potentially facing the same challenge again for the surviving spouse.
Years ago, traditional long-term care insurance was the primary option available. However, many policies came with very high annual premiums, “use-it-or-lose-it” structures, and increasing costs over time. Insurance companies also faced mounting claim obligations as people began living longer, causing many carriers to either leave the marketplace or significantly redesign their offerings. Today, the conversation has shifted toward hybrid long-term care strategies, including fixed indexed annuities with long-term care rider benefits and hybrid life insurance policies that can help provide protection while also offering additional flexibility and value.
Due to the unknown future costs associated with long-term care, the goal of long-term care insurance is often not to eliminate 100% of the risk, but rather to help protect a meaningful portion of the retirement portfolio from a major spend-down event. Over the course of my career, I have found that there is rarely a perfect “cure-all” solution unless someone has substantial wealth and can comfortably afford a very robust “Cadillac-style” policy without negatively impacting the rest of their retirement strategy. For most families, the objective is much more practical — utilizing insurance company assets to help absorb a portion of future care expenses so that the remaining retirement savings and home equity may still be preserved for the healthy surviving spouse and the family’s long-term financial security.
If you would like to explore whether long-term care planning may make sense for your family, we encourage you to contact our office and specifically request a meeting with me, Bill Romeo, to review your situation. And for those who are already part of the Everest Retirement Planners family, please know that long-term care planning is one of the important pillars within our proprietary Tenzing FORMula, and it is something we regularly revisit together throughout the year during our ongoing planning conversations.
The strategies or products discussed may not be suitable for all individuals. All investing involves risk, including potential loss of principal. Individual results may vary based on unique circumstances. Consult a qualified financial professional to discuss your specific situation and suitability needs. Annuities are best suited for long term investors. Some features may be available only by the purchase of a rider, an optional addition to an annuity or life insurance policy that is available for an additional fee. Withdrawals prior to age 59 1/2 may be subject to an additional 10% tax penalty. Surrender charges may apply. Guarantees are provided by the claims-paying ability of the underlying insurance company.