5 Strategies to Protect your Retirement from a Long-term Care event

A long-term care (LTC) event has the potential to unravel even the most carefully planned retirement. With healthcare costs on the rise and life expectancy increasing, preparing for the potential need for care is not just prudent—it’s essential to preserving a sound financial strategy. 

According to the U.S. Department of Health and Human Services, nearly 70% of people turning 65 today will require some form of long-term care during their lifetime. With the average cost of a private nursing home room exceeding $100,000 per year, a lack of planning could jeopardize even the most disciplined retirement strategy. 

Here are several strategies to help protect wealth and ensure care needs do not derail a long-term financial plan. 

1. Consider Long-Term Care Insurance (LTCI) 

Long-term care insurance helps cover the cost of care provided at home, in assisted living facilities, or in nursing homes. This type of insurance can be particularly effective for individuals seeking to protect personal assets and maintain flexibility in how care is delivered. 

Because premiums are based on age and health, applying for LTCI coverage earlier—typically in one’s 50s or early 60s—can improve affordability and eligibility. It’s important to evaluate policy options carefully, focusing on benefit periods, daily coverage amounts, and inflation protection. 

2. Explore Hybrid Life + LTC Policies 

Hybrid policies combine permanent life insurance or annuities with long-term care riders. These products allow for the use of policy benefits to pay for care expenses. If care is not needed, a death benefit is paid to beneficiaries. 

These solutions are appealing to individuals who want to avoid “use it or lose it” insurance. In addition to being more flexible, hybrid policies may also offer guaranteed premiums and simplified underwriting, making them accessible to more clients. 

3. Leverage a Health Savings Account (HSA) 

Health Savings Accounts (HSAs) are a tax-advantaged tool that can play a critical role in long-term care planning. HSAs offer: 

– Tax-deductible contributions
– Tax-free growth
– Tax-free withdrawals for qualified medical expenses, including some long-term care costs 

Importantly, HSA funds can be used to pay for long-term care insurance premiums—within IRS limits that vary by age. Individuals enrolled in high-deductible health plans should consider maximizing HSA contributions to build a healthcare reserve over time. 

4. Understand Medicaid Eligibility and Asset Planning 

Medicaid can provide long-term care coverage, but only for those who meet strict income and asset criteria. Qualifying typically requires a significant spend-down of personal resources, and improper planning can jeopardize wealth intended for family or legacy goals. 

Proactive Medicaid planning, including the use of irrevocable trusts or other asset protection strategies, may be appropriate for some individuals. These strategies should always be coordinated with a fiduciary advisor and an elder law attorney to ensure compliance with Medicaid’s five-year look-back rule and other requirements. 

5. Build LTC Scenarios Into Retirement Modeling 

Incorporating long-term care scenarios into retirement projections ensures clients are not caught off guard. Financial advisors can stress-test retirement plans using conservative assumptions to measure the potential impact of a care event. 

This might include: 

– Setting aside a dedicated contingency reserve
– Adjusting portfolio withdrawal strategies
– Allocating more conservatively to preserve capital during care years 

Modeling LTC costs provides clarity, preserves client confidence, and supports financial resilience. 

Final Thoughts 

Long-term care planning is about more than insurance. It’s about preserving independence, protecting assets, and maintaining financial dignity. By integrating LTC considerations into a broader financial strategy, individuals and families can move forward with clarity and control—even in the face of life’s uncertainties. 

Abri’s mission is to guide clients through every life stage with integrity, transparency, and fiduciary care. Planning for long-term care is an essential part of that journey. If you have any questions on how to best prepare for the future, one of our advisors would be happy to hear your story and point you in the right direction.