Recently, a research study by OneAmerica revealed that nearly half (46%) of financial advisors are not advising their clients on the importance of long-term care (LTC) insurance. With this in mind, how are you preparing for the inevitable?

Even today, in my Facebook group of solo agers, a member initiates a discussion with, "Has anyone ever thought about what you are going to do when it is time you cannot take care of yourself and need to go to senior housing?"

Given that approximately 70% of us over the age of 65 are expected to require some form of LTC services during our lifetime, the necessity of having  a LTC strategy into retirement planning becomes evident. (How much care will  you need?)

Whether you work with a financial advisor or have LTC insurance, what's your plan to pay for all the care you may need down the road? The top two reasons financial professionals sell long-term care insurance are the same reasons you may want to purchase it — to remove the financial burden of LTC events from your families (73%) and to provide financial security (67%.)

We need to do a better job of preparing for the risk of a major expense like long-term care! Here are some actionable strategies:

1. Understand the Risk

The first step in preparation is understanding the risk itself—about 70% of the 65+ will require some type of long-term care services in their lifetime. This care can range from assistance with basic personal tasks to full-time care. Recognizing the likelihood of requiring such care is crucial to planning effectively.

2. Educate Yourself on Long-Term Care Options

Familiarize yourself with the various long-term care options, including in-home care, assisted living facilities, and nursing homes. Each option comes with its own set of advantages and costs. 

3. Consider Long-Term Care Insurance

Long-term care insurance can be a valuable tool in managing the potential financial impact of future care needs. Policies can vary widely in terms of coverage, benefits, and premiums, so it's important to research and compare options. Consult with a financial advisor or an insurance specialist to find a policy that suits your needs and budget.

4. Explore Hybrid Insurance Products

Asset-based or hybrid insurance products, which combine life insurance or annuities with long-term care benefits, offer another route for preparing for long-term care expenses. These products provide flexibility, as they can serve as a source of income or a death benefit if the long-term care benefit is not utilized.

5. Plan for Medicaid Eligibility

For those who may not be able to afford private insurance, Medicaid can be a vital resource for covering long-term care costs. However, qualifying for Medicaid typically requires meeting stringent income and asset limits. Legal strategies, such as setting up a Medicaid Asset Protection Trust, can help you plan for eligibility without depleting all assets.

6. Save and Invest Wisely

A disciplined saving and investment strategy can also help you prepare for future long-term care needs. Consider working with a financial planner to create a diversified investment portfolio designed to grow over time, taking into account your risk tolerance and time horizon.

7. Include Long-Term Care in Your Estate Planning

Make long-term care planning a part of your broader estate planning strategy. This may involve drafting legal documents, such as a living will and healthcare proxy, to ensure your care preferences are followed. Consider how you can use your estate to fund your long-term care, whether through the sale of assets or through specific financial products.

Preparing for long-term care is a multifaceted process that involves understanding risks, exploring insurance options, strategic financial planning, and open communication with loved ones. Take steps today to better manage the financial impact of long-term care.

Hope this helps you plan appropriately for LTC.

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Carol Marak
Carol Marak LLC