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What Is Your Long-Term Care Plan?

By Lisa Manzolillo, CFP®, CDFA®

If someone told you that you had missed a critical step in your retirement planning, would you take action to remedy the problem as soon as possible? Unfortunately, many Americans have just such a planning gap in the form of long-term care, with only 1 in 5 adults making any effort toward financing their future long-term care expenses.[1] Since an average 63% of today’s 65-year-olds will require some form of long-term care during their lifetimes, it’s important to have a plan to pay for these costs.[2] Here are some factors to think about when crafting your plan, as well as a few strategies to help you finance this piece of your retirement plan. If you are not yet considering a long-term care plan, consider discussing them with your parents or any aging relatives that you are concerned about. 

What Will I Pay For Long-Term Care?

Long-term care costs can erode your retirement savings if you aren’t careful. On average nationally, it costs $267 per day or $8,010 per month for a private room in a nursing home.[3] Furthermore, because of their longer life expectancy, women pay significantly more for long-term care. The average amount of time women require long-term care for is 3.7 years (or around 44 months), adding up to $352,440 in expenses.[4] For men, who need long-term care for an average of 2.2 years (or around 26 months), that equals $208,260. 

And costs are only projected to increase. In the past five years, long-term care expenses have jumped about 3%, with a big jump in prices from 2016-2017.[5] By 2026, the average cost is expected to increase to $4,876 per month for assisted living,[6] compared to $4,000 today.[7] These costs can vary based on the level of care and amenities needed, as well as the size of the room and your location, so your first step in making your own long-term care plan is to decide what type of care you prefer. 

What Type Of Care Would You Like?

If you have a family history or early signs of Alzheimer's or dementia or if you suffer from a chronic disease that will require ongoing care or daily assistance, you may want to look into facilities that offer the specific care you may require. Be sure to share your preferences with your family. Would you like to live in a nursing home or would you prefer nurses and assistants come to your residence? Do you want a religious community of care? There are several options to take into consideration when creating your long-term care plan. 

Many people grieve the loss of independence and autonomy when their health suffers in the latter years of their life. Drafting up a long-term care plan now will give you some much-needed control over how you spend the rest of your life. If you wait until you need long-term care, you may not be in good enough health to make the decision, or your age and condition could make it difficult to purchase insurance at an advantageous rate. Whether you’re worried about potential health concerns or want to protect your hard-earned wealth, it’s important to understand the long-term care insurance options available to you and whether or not a policy makes sense for your lifestyle and needs. 

What Are My Long-Term Care Options?

Once you have an idea of what you want your long-term care to look like, it’s time to research ways to pay for it. Long-term care coverage isn’t cheap, but it pales in comparison to long-term care costs when purchased outright. Here are some options to consider when creating your long-term care strategy. 

1. Traditional Long-Term Care Insurance

With traditional long-term care insurance, you pay a premium in exchange for the ability to receive benefits if they are needed. If you need long-term care at some point, the policy provides you with money to pay for it. If you never need long-term care, then you receive no benefits. It’s a “use it or lose it” policy. Just like any insurance policy, you will have some coverage choices to make.

Customized Coverage

You can choose the level of insurance you want and select the daily benefit amount for care in a nursing home. You can also add home-care coverage if that is a priority for you. In order to choose the right coverage amounts, you need to know what the cost of long-term care looks like in your state. For example, a private room at a nursing home in New Jersey will cost an average of $11,863 a month, and hiring a home health aide could set you back almost $55,000 for the year.

Length Of Coverage

You must also decide on the length of time you want the benefits to be paid. Common options are one, two, three, or five years, or for your lifetime. The longer the benefit period, the higher the premiums you will need to pay. 

Benefit Stipulations

Your policy will also indicate “benefit triggers,” or conditions which must exist in order to receive benefits from the insurance company. A tax-qualified plan only pays benefits once you are unable to perform two of six activities of daily living without substantial assistance for at least 90 days, or have a cognitive impairment like Alzheimer’s. Non-tax-qualified plans may have less restrictive benefit triggers.

Inflation And Premiums

If you want, you can have your benefits increase with inflation to match future care costs. It is also important to note that premiums can increase as they are not usually set in stone.

2. Life Insurance With A Long-Term Care Rider

With a traditional long-term care policy, people sometimes feel that if they buy it and don’t use it, they have wasted their money. Because of this, several hybrid products have emerged. One very popular solution is a life insurance policy with a long-term care rider. This strategy is enticing because if long-term care is needed, the funds are available through your policy’s death benefit. If you don’t spend the total benefit available, your beneficiaries will receive the balance upon your death, thus no wasted money. 

If you need life insurance, getting your long-term care coverage as a rider may be a good option. This way, someone will be benefiting from the premiums you are paying, whether it is you or your heirs.

3. Save On Your Own

Consider starting a savings plan specifically for future healthcare needs. One option is to create a separate, high-yield savings account and contribute a specific amount every month, building a contingency fund for whatever healthcare expenses come your way. If you end up not needing long-term care, the money is still yours and can be used for your living costs, unexpected expenses, or an inheritance for your heirs. 

Prepare Your Plan Now!

Depending on where you are in life, it may be important to start planning for this aspect of retirement or to speak with an aging family member about their options. While thinking about the need for long-term care can be deeply unsettling and confusing, Simon Quick Advisors are here to optimize each piece of your financial plan and provide you with the resources you need to make the best decisions for your family. If you have questions about your long-term care options and want to make sure you have the coverage you need, call us at 973-525-1000 or email info@simonquickadvisors.com.

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About Lisa Manzolillo

Ms. Manzolillo joined Simon Quick in 2018 with over 13 years of experience in wealth management and investing. As a Client Advisor based in Morristown, NJ, she works with clients to identify and implement custom-tailored investment management and financial planning strategies designed to help each client achieve their unique financial goals and objectives. Ms. Manzolillo has experience working in all areas of financial planning, including retirement planning, estate planning, tax planning and risk management. Ms. Manzolillo graduated summa cum laude from University of Rhode Island with a BS in Accounting and earned an MBA with a finance concentration from Fordham University. She completed her Financial Planning Certificate Program at Pace University and became a CERTIFIED FINACIAL PLANNER™ practitioner in January 2008. In 2017, Ms. Manzolillo became a Certified Divorce Financial Analyst (CDFA).  To learn more about Lisa visit her LinkedIn.


  • [1] https://www.advisortoday.com/2017/10/26/ltc/
  • [2] https://longtermcare.acl.gov/the-basics/
  • [3]https://www.genworth.com/dam/Americas/US/PDFs/Consumer/corporate/cost-of-care/131168_081417.pdf
  • [4] https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
  • [5]https://www.genworth.com/dam/Americas/US/PDFs/Consumer/corporate/cost-of-care/131168_081417.pdf
  • [6]https://www.fool.com/investing/general/2017/06/10/your-2017-guide-to-long-term-care-and-long-term-ca.aspx
  • [7]https://www.genworth.com/aging-and-you/finances/cost-of-care.html


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