How Will You Pay for Long-Term Care?

It’s an unpleasant reality for many retirees. According to the U.S. Department of Health and Human Services, nearly 70 percent of people turning age 65 will need long-term care at some point in their lifetime.1 Many will need care for several years, and the cost of that care could be several thousand dollars per month.

As you might imagine, those costs can add up. Without a plan in place, you could drain your retirement assets paying for in-home care, assisted living, nursing home care and more. If you don’t have assets to pay for care, you may have to settle for a level of care that doesn’t meet your standards. And if you have a healthy surviving spouse, he or she may be left with few assets after you pass away.

If you are approaching retirement or in the early years of retirement, now may be the time to develop a long-term care funding strategy. If you wait until you actually need care to address the issue, you may find that you have few feasible options available.

Below are a few of the most common ways that retirees pay for long-term care. Which can you rely upon to fund your potential long-term care needs?


It’s possible that you may pay for long-term care out of pocket from your retirement assets. In fact, many seniors do this for a temporary period. However, the high cost of long-term care usually makes self-funding a difficult strategy for all but the wealthiest Americans.

Consider that the average cost of an in-home care aide in 2016 was more than $3,800 per month. The average cost of a room in an assisted living facility was $3,628, while a semiprivate nursing home room averaged $6,844.2 If that care is needed for an extended period, those costs could quickly deplete your assets.

Medicare and Medicaid

Many retirees assume that Medicare will cover the cost of long-term care. That assumption is incorrect. Although there are some unique instances in which Medicare will partially and temporarily cover stays in rehabilitation facilities, it does not cover extended care and assistance.

Medicaid, on the other hand, will cover nursing homes, assisted living and even in-home care. The caveat is that to qualify for Medicaid, you must have few assets and little income. Some retirees switch to Medicaid coverage after spending down most of their assets. However, there aren’t many strategies to use Medicaid while also preserving your savings and other resources.

Long-Term Care Insurance

A final option is long-term care insurance. This is a type of insurance in which you pay premiums today and then, in the future, the insurance company pays some or all of your long-term care costs, depending on your policy terms. Most policies cover care provided in facilities or in your home.

There are also some policies that have a life insurance component. That means if you don’t fully use the long-term care insurance, your beneficiaries will receive the remaining coverage as a death benefit.

Interested in developing a long-term care funding strategy? Let’s discuss it. Contact us today at Lighthouse Financial to learn more. We’re happy to help you analyze your needs and develop a plan. Let’s connect today and start the conversation.



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16163 – 2016/10/18

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