Thanks to incredible medical advances and healthier lifestyles, seniors in the U.S. are living increasingly longer lives. Recent estimates give a healthy 65-year-old man a 24% chance of living to at least 90 and a healthy woman a 35% chance of living that long. As medical advances continue to improve, life expectancies will likely rise even higher.
Although this is great news, it adds to the challenge of retirement income planning. It’s no wonder that many people say one of their biggest fears is outliving their money. A comprehensive financial plan — one that includes financial, tax, estate and long-term care planning — can help ensure your wealth lasts your lifetime.
Building a comprehensive financial plan.
- Life insurance: This helps protect your family if something happens to you and can replace lost income.
- Medical insurance: With health care costs rising, medical coverage is essential to protect savings.
- LTC insurance: Unexpected long-term care costs can quickly reduce retirement savings, so budgeting for an LTCI policy is important.
- Estate planning: A durable power of attorney, a will, a health care proxy and guardianship arrangements help ensure your property goes to the people you choose and can reduce taxes, court costs and attorney fees for your family.
A truly comprehensive plan integrates these elements rather than treating them as separate pieces.
LTC is no longer a luxury.
Although many people recognize the need for financial and estate planning, long-term care (LTC) planning is often overlooked. Financial planning helps you accumulate assets and estate planning helps preserve them, but LTC planning protects those assets from the high costs of extended care.
Statistics show a significant share of LTC services are used by adults under age 65, which underscores that LTC planning can be relevant at many stages of life. Medicare and Medicaid do not reliably cover long-term care expenses, but Long-Term Care insurance (LTCI) can help cover many of those costs when needed; for more on costs and planning, see Understanding Retirement and Long-Term Care Costs.
Buying LTCI earlier can improve your chances of qualifying for preferred health rates and may lower premiums, so experts often recommend considering a policy sooner rather than later.
Assemble a team of pros.
You don’t have to build a comprehensive plan alone. Seek informed, well-educated professionals who can work together to create an integrated financial, tax, estate and LTC plan.
A unified team of advisers coordinating across specialties can help you avoid gaps and conflicting strategies; for guidance on retirement planning basics, see Planning for Retirement: Key Considerations.
Frequently Asked Questions
What is long-term care insurance (LTCI)?
LTCI helps pay for services that assist with daily living activities or provide extended medical support not typically covered by health insurance.
When should I consider buying LTCI?
Many experts recommend considering LTCI earlier in midlife to improve eligibility and access to lower premium rates, though the right time depends on personal health and finances.
Does Medicare cover long-term care?
Medicare generally does not cover most long-term custodial care services, so relying solely on Medicare can leave significant gaps.
How does LTC planning fit with estate planning?
LTC planning can protect assets that would otherwise be spent on care, helping preserve wealth for beneficiaries and reducing potential legal complications.