Planning for Long Term Care: An Important Part of Being Prepared for Retirement

Dementia. Stroke. Alzheimer’s disease. The prevalence of these health events is a big reason why you need to make planning for long term care an important part of your retirement planning.
Planning for long term careWill you need to give care? Will you need care?

What is Long Term Care?

Older Americans continue to be in the dark when it comes to the cost and risk of needing long-term care, new research shows.

Long-term care is a range of services and support for your personal care needs, explains the official Medicare website.

Most long-term care isn’t medical care, but rather help with basic personal tasks of everyday life, sometimes called activities of daily living. And none of these services — nor even long term nursing needs — are covered by Medicare.

Most of Us Will Need Care

Your chances of requiring long term care are high. About 70% of Americans who get to age 65 will need some type of long-term care, many Americans are unprepared for this reality.  And, 45% of people who are under age 65 will require some long term care help.

Few Americans Are Planning for Long Term Care

According to The NORC Center for Public Affairs Research:

  • Only a third of Americans say they are very or extremely confident in their ability to pay for ongoing living assistance they may need in the future.
  • 54 percent report doing little or no planning for these needs.

The Costs of Long Term Care Are Staggering – Especially for Women

According to research published by Morningstar, long term care costs can be prohibitively expensive and the costs have been growing. In 2000 the long term care expenditures in the U.S. were $30 billion. By 2015 those costs grew to $225 billion.


  • The estimated lifetime cost of care for someone with dementia is $341,840. And, if you live to age 85, then you have a 33% chance of developing Alzheimer’s.
  • .

And, if you are a woman or love an aging woman, the costs of long term care can be particularly staggering.

A study from Emory University researchers in Women’s Health Issues shows that the cost of caring for women who are diagnosed with Alzheimer’s is nearly six times higher compared to men, due to higher use of paid caregivers. By comparison, spending for men on this type of care is more informal, with spouses providing more and spending less on hired caregivers. For most seniors, Medicare only covers some of the cost of caring for a loved one with Alzheimer’s full time, which leaves a big burden for families.

As we get older, it’s crucial to be set up for the golden years with care plans and financial stability, especially for an unexpected diagnosis. Women are more likely to be impacted by dementia, as nearly two-thirds of those diagnosed with Alzheimer’s disease are women compared to men.

Worried About Long Term Care and Your Future? Do These 6 Things

“As Baby Boomers age, Alzheimer’s disease and other forms of dementia will place a greater strain on our healthcare system and on families,” said Chloe E. Bird, PhD, editor-in-chief of Women’s Health Issues, said.

However, there are things that you can do right now to ensure your family and loved ones are better off throughout life.

Here are 6 ways to prepare for a long term care need:

1. Keep Watch for Signs of Mental Decline

Any diagnosis for you or a loved one can be scary, but Alzheimer’s is the most common form of dementia and it affects nearly 5.3 million Americans, according to the Alzheimer’s Association. Unfortunately, Alzheimer’s has no cure, and caring for someone with the disease can be financially draining without proper planning. (Though, good news, Alzheimer’s rates ARE declining.)

Alzheimer’s disease is not a normal part of the aging process and will not affect all seniors or families. Early diagnosis is key for dementia sufferers, as the disease progresses over time and the type of care a person may need will also change. From mild changes in speech, mood or behavior, understanding some of the warning signs of Alzheimer’s can make a big difference when it comes to planning.

“It can be easy to explain away unusual behavior as part of normal aging, especially for someone who seems physically healthy,” according to the Alzheimer’s Association. “Any concerns about memory loss should be discussed with a doctor.”

And, there are new medical interventions that can help slow the progression of the disease.

2. Understand Costs of Long Term Care

The high costs of long term health care can spell financial ruin — destroying your retirement plan.

Not Medicare, Medigap nor private medical insurance covers long term care costs beyond a certain modest point. Most people will face major healthcare costs in retirement, yet few people include these costs in their retirement planning. The money spent on long term care could significantly reduce or even wipe out your savings.

Model costs and explore options for paying for long term care with the NewRetirement Retirement Planner.

3. Seek Advice

If you’re a caregiver or a family member of a someone diagnosed with Alzheimer’s, seek help.

You may need financial guidance, as well as direction on how to make care and living choices. There are also legal implications for a person with a cognitive disease, and working with a lawyer may be the right choice to get all your ducks in a row.

4. Planning for Long Term Care, Choose the Best Option for You

Depending on the length of time you might require care, long term care could easily be the MOST expensive part of your retirement. As such, it must be included as part of your retirement planning process.

There are a handful of ways for planning for this expense:

Long Term Care Insurance: This option can be expensive and it doesn’t always cover what you need covered. Explore the pros and cons of long term care insurance.

Deferred Lifetime Annuity: When you buy a deferred lifetime annuity (sometimes called Qualified Longevity Annuity Contracts – QLAC), you are using a sum of money now to buy the promise of guaranteed income in the future. This can be a good way to plan for having funds available for long term care. Learn more about QLAC.

Relying on Family: Many families lean on siblings or adult children to provide long term care. This can be stressful and should be considered carefully.

Moving Abroad Where Care Might Be Less Expensive: Your family might not be happy with this type of decision and it could be a logistical nightmare, but care can be significantly more affordable abroad.

Self Funding: If you have adequate resources, self funding might be the most efficient way to cover this unpredictable cost. However, you will want to consider how this money is invested and make sure it is available when and if you need it.

Tapping into Home Equity: If you own your house, it is an important retirement asset. It gives you real options for long term care. You can:

  • Sell your home and use the proceeds to move into a facility
  • Get a reverse mortgage and fund care in your own home
  • Downsize to a more affordable home and use the difference to fund long term care
  • Rent out rooms in your home and share the costs of long term care

Using Up Savings, Then Qualifying for Medicaid: This is what often happens. Some families even specifically plan for how to do this most efficiently, but that is perhaps not the most moral option. Learn more about Medicaid’s dirty secrets.

Some Combination of the Above: This is – by far – the most common solution.

The NewRetirement Retirement Planner has some powerful modeling options that enable you to model these different scenarios for funding long term care.

Try different options and see what works for you.

5. Talk About Care Needs and Preferences

Families should discuss care plans and preferences now to be better prepared before a diagnosis. Getting plans in order can enable a person to share their wishes for care before any cognitive decline could affect their decisions. It can also be a good idea to set up help for a person if they suddenly are unable to keep up their lifestyle.

While these plans might never be needed, it’s always best to have a back-up so you’re not taken by surprise financially or otherwise.

6. Do What You Can Now to Prevent the Onset of Dementia, Alzheimer’s and Other Diseases

The landmark study, the Finnish Geriatric Intervention Study to Prevent Cognitive Impairment and Disability (FINGER), found that agressive management of lifestyle variables like eating well, exercising, intellectual stimulation, social involvement and active monitoring of cardiovascular health, reduced the incidence of Alzheimer’s by as much as 30 percent.

These activities are also proven to improve health overall.

NewRetirement Planner

Do it yourself retirement planning: easy, comprehensive, reliable

NewRetirement Planner

Take financial wellness into your own hands and do it yourself retirement planning: easy, comprehensive, reliable.

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