What is long-term care planning?

It happens to everyone. Aging takes a toll on physical and mental health and, if you live long enough, chances are you’ll need assistance with day-to-day tasks that you were historically able to manage on your own. You may need mobility assistance such as help getting up and down stairs, bathing and dressing. Or, in case of cognitive decline, you may need assistance preparing meals or remembering to take medications. Long-term care can provide the assistance you need, whether that’s part-time, in-home nursing care or a transition to an assisted living or nursing home.

Why long-term care planning is essential

Have you considered the expense of long-term care? According to the U.S. Department of Health and Human Services, 70% of senior adults who survive after age 65 will develop disabilities that require them to have long-term services and support.¹ With an average life expectancy of 78.4 years, you could well be one of the millions of seniors who requires long-term care at some point.²

Accessing daily care, whether in the form of in-home assistance or leasing a residence at an assisted living facility, is expensive. Consider that the median cost of an assisted living facility is about $200 per day or $73,584 per year.³ Offering round-the-clock assistance, nursing home residence is even pricier, running an estimated $114,665 annually for a semiprivate room.⁴

Clearly, expenses add up quickly and can eat away retirement savings. In some cases, if your retirement savings are insufficient to cover these expenses, your family will be left with the burden of caring for you or financing the cost of care. For these reasons, it’s essential to consider long-term care when planning for your retirement. By planning ahead, you can help ease the financial and emotional burden associated with your loved ones having to provide you with critical care as your age. 

What is long-term care?

In order to plan for long-term care, it’s first important to understand what exactly it entails. Assistance with daily living activities can be provided by a variety of individuals, in a variety of settings, depending on the intensity of care required and the personal preferences of the individual and/or family. Here are some of the most common long-term care options.  

• Nursing homes — Nursing homes provide 24x7 care for elderly individuals who are severely compromised in their capabilities.
• Assisted living facilities — Assisted living facilities are typically designed for seniors who need assistance but can live somewhat independently. Some assisted living facilities have different levels of care available so that if a resident progressively loses capabilities, they can be transferred to an area with a higher level of care.
• In-home nursing care — In-home care involves paying a registered nurse or qualified aid to come to the senior’s house on a daily or weekly basis to assist with care. 
• Adult daycare — Adult daycare offers a safe and secure environment where seniors can socially engage outside the home. Depending on the facility, adult daycare may be appropriate for more independent seniors, but they can also include daily care services that allow family caregivers to take a much-needed break or work during the day.
• Other LTC services — Other long-term care services may include things like transportation, home modifications or physical or occupational therapy if rehabilitation is possible.

Understanding long-term care needs

Some real-life examples highlight the different kinds of scenarios you or your loved ones might encounter with age.

Fred and his LTC group policy

Take Fred, a 65-year old widower who unexpectedly suffered a major stroke triggering a 4-week hospital stay. He attended occupational therapy to relearn to walk and returned home walking with a cane. He found himself unable to climb stairs and his doctor indicated that he should not drive until they could determine how much of his mobility he would recover, a process that would take up to a year. Fortunately, Fred had group long-term care coverage through his employer. He filed a claim with the help of his doctor and began receiving a weekly benefit of $1,500, which he used to pay for a few hours of in-home nursing care each day as well as transportation to and from his therapy appointments while he continued to recover.

Myra and her individual long-term care policy

Myra’s husband, Randall, noticed her becoming more forgetful and took her to the doctor to learn that she had Alzheimer’s. Randall was able to care for Myra for 9 months but the burden became too much as she lost more and more cognitive and physical capabilities. Fortunately, Myra had invested in long-term care policies for both herself and her husband, anticipating that one, and possibly both of them would require care as they aged. Randall filed a claim and began receiving benefits that allowed him to move Myra into a memory care facility just 5 miles from their home where he could visit daily. The lease was expensive, but the LTC insurance monthly allowance covered 90% of the cost and he was able to draw the remaining 10% from the couple’s retirement savings. Randall was relieved that he could provide great care for his wife, which he would not have been able to afford were it not for his LTC policy.

Steve with a hybrid life insurance policy with long-term care

Steve moved in with his daughter’s family after his wife passed away 5 years ago. His family noticed that he was suddenly losing weight and extremely tired. They were blindsided when he went to the doctor and was diagnosed with terminal stomach cancer. After going through several surgeries, Steve returned home and needed help bathing, eating and dressing. The family wanted to keep him at home as long as possible. Fortunately, 15 years ago, Steve invested in a hybrid life insurance with long-term care policy, which combines both types of coverage in a single policy. After submitting paperwork, the policy paid out $6,000/month to go toward in-home nursing care and equipment that allowed Steve to rest comfortably in his home until he passed away 6 months later. His children received a death benefit from this policy upon his death. 

Why you need to plan for long-term care

Healthcare and long-term care are some of the largest expenses in retirement and they are rising faster than inflation. According to Motley Fool, just 3 – 4% of individuals over the age of 50 have any kind of long-term care policy.⁵ 

In each of the scenarios above, early planning by Fred, Myra and Steve resulted in less stress when the need for long-term care presented itself. Some of the benefits of planning in advance for long-term care include:

• Preserve financial assets that you’ve saved for retirement that you might otherwise have to spend on long-term care.
• Reduce the burden on your family who might struggle to care for you themselves or be unable to afford optimal care.
• With the funds to support your long-term care through insurance or annuity coverage, it’s much more likely that you will be able to afford the type of care you prefer, whether that is aging in place or transitioning to assisted living.
• LTC coverage may allow you to maintain your independence longer with the help of transportation services, in-home nursing care and rehabilitation services.

How to plan for long-term care: A checklist

Here are some steps you might take to help you plan for long-term care.

1. Assess your future care needs — While you can’t predict the future, you can use available information on your current health, family history and national statistics to help assess your chances of requiring long-term care. You can also evaluate your savings and financial resources slated for retirement and determine how the need for long-term care could impact your retirement budget. Use this insight to prioritize your investment in long-term care coverage compared with other financial needs.
2. Estimate long-term care costs — The next step is to estimate the funds you might need to cover long-term care. There are several online calculators like this one from SeniorLiving.org that help you consider your age, the cost of inflation, the duration and type of care required to come up with an estimate. You can also connect with a qualified financial planning professional for assistance. 
3. Evaluate financial resources — Based on your current retirement savings, financial assets, insurance coverage and access to healthcare insurance and/or Medicaid, determine what portion of the LTC expenses calculated in the step above can be covered by existing assets or coverages. Identify the gap between available funding and estimated cost.
4. Explore long-term care coverage — Based on the estimated amount to be covered, identify potential coverage solutions that could help you bridge the financial gap. Consider multiple options as well as pricing, availability and your current insurance coverage already in place. Your options may include traditional long-term care insurance, an annuity with LTC rider, group insurance or self-funding.  
5. Create and share your plan — Create a plan for long-term care and discuss it with your family. Share with them your preferences and the plans you’ve put in place to support long-term care. 
6. Prepare legal documents — While you’re in the midst of this process, it may be a good time to make sure all the relevant legal documents are in place such as a power of attorney, trust documentation and medical power of attorney. 
7. Review and update your plan regularly — It’s a good idea to review and update your plan regularly, as conditions change. As you get older, your health can change quickly. You will also have a better idea of your expenses during retirement. Family conditions also change. Spouses pass away, families move, babies are born—changes are constant. Review your plan at least once every other year and make changes as necessary.  

Financial planning for long-term care

Many individuals fail to consider the expense of long-term care when planning for their retirement. Fortunately, there are a number of options to help you plan for long-term care. Learn more about each to determine which might be right for you.

• Long-term care insurance — Long-term care insurance is an insurance policy designed exclusively to cover long-term care. You apply, complete a medical exam and, if accepted, pay monthly premiums into the policy. During the term of the policy, if you require long-term care as verified by a medical professional, then you will receive payments to help cover LTC expenses. This type of policy often offers extensive coverage, but if you never have a medical need for long-term care, then your premiums are forfeited. 
• Hybrid life insurance or annuity products — There are LTC riders available on many life insurance and annuity products, which allow you to pay higher premiums to receive payouts to help you cover LTC expenses in case of a qualifying event. 
• Self-funding through savings — Particularly for those that begin planning for long-term care early, it is possible to set aside savings, specifically earmarking those funds for long-term care. Key strategies may include setting aside dedicated savings, leveraging tax-advantaged accounts like HSAs or IRAs and considering the timing of withdrawals to maximize tax deductions for medical expenses.
• Health Savings Accounts funds — HSA savings can be deferred to help pay for long-term care expenses by allowing funds to accumulate tax-free over time to be used later for qualified medical costs. Contributions are made pre-tax, grow tax-free and can be withdrawn tax-free for eligible expenses, including long-term care insurance premiums and medically necessary services in assisted living or nursing homes. 
• Reverse mortgages — A reverse mortgage can help pay for long-term care expenses by allowing homeowners aged 62 or older to convert part of their home equity into cash without having to sell their home or make monthly mortgage payments. The funds received—either as a lump sum, monthly payments or a line of credit—can be used to cover LTC expenses.
• Government programs — Certain government programs like Medicaid and the Program for All-Inclusive Care for the Elderly (PACE) are available for seniors who qualify. These programs are designed to offer low-income and qualified seniors financial support to receive the care they require. 

Legal considerations when creating long-term care plans

There are several legal considerations to keep in mind when planning for your future long-term care needs to ensure your wishes are carried out. In case of a medical emergency that would cause you to be incapacitated for some length of time, or if you were to suddenly experience a decline in cognitive capabilities, you would need documentation in place to ensure that someone you trust could make decisions on your behalf. Here are some legal documents to discuss with your attorney.

• Power of attorney — Administering long-term care involves complex medical, financial and administrative tasks—such as managing bills, coordinating with care facilities and making healthcare choices, all of which require legal authority. A power of attorney (POA) is a legally binding document that gives an individual of your choosing the right to legally act on your behalf. By having a POA in place, you can help ensure your wishes for your own care are fulfilled, that there is continuity of care and that your family will be able to access the financial resources you intended to help fund your care. 
• Medical power of attorney — Creating a medical power of attorney (MPOA) ensures that someone you trust can make healthcare decisions on your behalf if you become incapacitated, including critical choices like life support or resuscitation. Unlike a general power of attorney, which ends when you’re unable to make decisions, an MPOA remains valid and prevents delays or court involvement in appointing a decision-maker—helping safeguard your medical wishes.
• Trusts – Trusts can provide a way to protect your assets from being depleted by nursing home or assisted living costs. Specialized trusts such as Medicaid Asset Protection Trusts (MAPTs) are irrevocable trusts that can be used to ensure your assets are preserved for your heirs while simultaneously helping you qualify for Medicaid, which can cover long-term care expenses. You’ll want to consult with a qualified estate planning attorney to gain a full understanding of these entities and how they apply to your long-term care strategy. 

What is the best age to start planning?

There is no specific answer to the question of when to start planning for long-term care, but suffice it to say: the earlier, the better. As is the case with all retirement strategies, the sooner you start, the more time you have to save, the less expensive it is to secure insurance policies and the better your opportunity to secure financial security for your loved ones after you’re gone.  

FAQs about long-term care planning

• How do I plan for long-term care?
  Becoming aware of the what long-term care is and how it could impact your daily life and your finances in retirement is a good place to start. Consider the fact that you may need long-term care at some point in your life and make provisions to financially provide for this type of care to deliver peace of mind to yourself and your loved ones. 

• What does long-term care insurance cover?
  Traditional and group long-term care insurance policies are designed to provide coverage for long-term care expenses, which can range from in-home aid to assisted living and nursing home expenses. To receive payments, you must have a qualifying medical event verified by a medical professional. It’s important to note that LTC insurance may not cover all LTC expenses, but may offer a daily or monthly benefit limit which can be applied to long-term services.

• Can Medicare pay for long-term care?
  Medicare does not cover long-term care expenses. However, Medicaid does cover long-term care expenses including room and board and all necessary medical and non-medical goods and services. However, the individual must meet financial and functional eligibility requirements to qualify for Medicaid. Check online to see if you qualify. 

• What’s the average cost of long-term care?
  The average cost of an assisted living facility is $73,584 per year.⁶ The average cost of a nursing home stay in a semiprivate room is $114,665 annually.⁷   

• Will I need long-term care?
  There is no crystal ball that can tell us the future of our health and mental state. However, experts estimate that 70% of individuals who survive past the age of 65 will need some sort of long-term service or support, so if you reach your late 60s or 70s, chances are you will require some form of care.⁸

• How long will I likely need long-term care?
  It’s impossible to know how long you may need long-term care. In cases of diseases like Alzheimer’s or Parkinson’s you may need care for decades and up until your death. In other cases, an injury or recoverable illness may require you to access care for several months while you rehabilitate. 

In this article, we’ve explored some considerations when it comes to planning for long-term care. Visit the Protective Learning Center to learn more about long-term care insurance and annuities with LTC riders. These are some of the options for helping you cover the expense of long-term care.  

Sources:

1. U.S. Department of Health and Human Services, “What Is the Lifetime Risk of Needing and Receiving Long-Term Services and Supports?” April 3, 2019.
2. National Center for Health Statistics, “Life Expectancy,” 2023.
3. SeniorLiving.org, “Nursing Home Costs in 2025,” October 8, 2025.
4. SeniorLiving.org, “Nursing Home Costs in 2025,” October 8, 2025.
5. Motley Fool, “The Biggest Retirement Expenses Most People Forget About,” September 25, 2025.
6. SeniorLiving.org, “Nursing Home Costs in 2025,” October 8, 2025.
7. SeniorLiving.org, “Nursing Home Costs in 2025,” October 8, 2025.
8. Motley Fool, “The Biggest Retirement Expenses Most People Forget About,” September 25, 2025.

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