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Why Long-Term Care Should Be Part of Your Retirement Strategy

Filed under: Managing Medical Costs

If you’re approaching retirement, you’re probably aware of the risk posed by long-term care, which is extended assistance with daily living activities such as eating, mobility and bathing. Long-term care is usually provided either in a facility or in the home. Either way, it can be costly and can drain your retirement assets.

AARP recently published a report on the state of long-term care in the United States. Specifically, it ranks each state by the quality and affordability of care available to seniors. While the scores and information vary by state, there is some information that’s applicable to all retirees, regardless of where they live.

For example, AARP estimates that more than half of all people turning 65 today will require long-term care at some point in the future. The report also estimates that care provided in a nursing home can cost more than $90,000 per year, while in-home care costs north of $30,000 annually.1

As you might guess, that kind of expense can have a big impact on a retirement. Long-term care is often needed for years. Over time, the costs can become a major drain on your savings. Consider that long-term care usually isn’t covered by Medicare, and it’s easy to see the importance of planning for this risk.

The good news is there are steps you can take today to minimize your exposure to long-term care risks. Below are three strategies you may want to consider. If you haven’t planned for long-term care, now may be the time to do so.


Use your HSA.

Do you have access to a health savings account, also called an HSA? This could be a powerful savings tool not only for long-term care, but for all medical costs in retirement.

You can contribute pretax dollars to your HSA, which would lower your current taxable income. As long as the money stays in the account, you don’t pay taxes on growth. Then you can withdraw the funds tax-free as long as the money is used for qualified medical expenses.

The good news is that many expenses count as qualified costs, including long-term care. You can use your HSA to pay for nursing home costs, to pay an in-home health aide or even to modify your home to accommodate a wheelchair or other equipment. If you have access to an HSA, you may want to maximize your contributions.


Consider long-term care insurance.

Long-term care insurance can be an effective way to minimize the financial risk of extended care. You pay premiums to an insurance company. Then, when you need care, the company pays some or all of the costs based on the terms of your policy.

Many long-term care policies cover care in facilities or in your home, as well as home modifications. Some also have a death benefit component. That means if you don’t use the policy, you can leave some of the benefit to your spouse or other loved ones.


Talk to your family.

Perhaps the best planning step is to talk about long-term care with your family. Discuss the very real possibility of needing care, and ways in which the family could provide support. Perhaps your kids can help out. Or maybe they can facilitate transportation and other services. You may have a wide network of support that you don’t even know about. However, you need to have the conversation to tap into that network.

Ready to develop your long-term care strategy? Let’s talk about it. Contact us today at Ambrose Financial & Insurance Services. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.




Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16830 – 2017/7/17