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August 30, 2017 - Long-Term-Care Insurance as a Retirement Planning Strategy

| August 30, 2017
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Ensuring you have the money you need to support you throughout retirement is an ongoing responsibility that shouldn’t be overlooked, no matter what retirement stage you’re in. When building and maintaining your plan, healthcare is a major component of the retirement costs you need to manage. In fact, retired couples today may spend up to $350,000 on healthcare costs alone.1 You can fill financial gaps and protect your standing with long-term-care insurance.

Here are some ways long-term-care insurance can help you manage your financial life.

1. Cover costs associated with chronic illnesses

Long-term-care insurance is here to help people pay for costs associated with chronic illnesses, such as Alzheimer’s. The insurance enables retirees to have financial coverage for healthcare costs resulting from daily living needs like having a caregiver to help with bathing and dressing. Individuals can also use long-term-care insurance to help pay for rehabilitative and other care-focused services, such as the expenses of nursing home facilities.2

When you look deeper, you’ll find that the costs can add up quickly. For perspective, here are today’s average annual expenses for various long-term-care services:3

  • Assisted living: $45,000
  • Nursing home: $82,855
  • Home care aid: $40,000

2. Help fill coverage gaps

While Medicare can help retirees cover various medical costs in retirement, they will more than likely still pay at least 13% of expenses out of pocket.4 And Medicare typically doesn’t pay for expenses associated with caregiving and custodial support.5 Long-term-care insurance works alongside Medicare and can help fill gaps you might otherwise have in your healthcare coverage without affecting your Medicare eligibility.6

Having financial safety nets to help you is essential, since relying on things like Social Security and your savings may not be enough. Here is a snapshot of some financial items for retirees:

  • Median savings for people in their 60s: $172,0007
  • Average monthly payment for Social Security benefits: $1,3608
  • Percentage of Baby Boomers with $300,000 – $500,00 saved: 9%9

3. Receive a tax break from buying it

Another perhaps more unexpected perk is that people who buy long-term-care insurance can typically claim tax benefits from doing so. Consider that the more money you save now in taxes, the more you can put toward your retirement savings—and this can be a valuable benefit. In fact, the tax perk is one the few ways that the IRS allows people to deduct expenses associated with future care in a current tax year.10

Here are some ways that you could claim these benefits:11

  • Deduct your premium under healthcare expenses, if you itemize deductions
  • Receive tax-free benefits when the policy pays out
  • Pay for the policy from your tax-deductible Health Savings Account (HSA)

Overall, the quality of your health, your financial needs, and your retirement goals can guide the best strategies to support your lifestyle. If you would like to discuss adding long-term-care insurance to your plan or review your current policy, we’re more than happy to talk. Please contact us today.


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Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered. They do not refer in any way securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company.


  1. http://www.marketwatch.com
  2. http://www.investopedia.com
  3. https://www.payingforseniorcare.com
  4. http://www.marketwatch.com
  5. http://www.investopedia.com
  6. https://www.medicareinteractive.org
  7. http://www.investopedia.com
  8. https://www.fool.com
  9. https://www.fool.com
  10. https://money.usnews.com
  11. https://money.usnews.com
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