Planning for Long-Term Care: Protecting Your Savings and Your Family

According to the Department of Health and Human Services, roughly 70% of people turning 65 today will need some form of long-term care during their lifetime. In New Jersey, the average annual cost of a semi-private nursing home room exceeds $130,000, and home health aide services run over $60,000 per year. These costs are not covered by Medicare beyond short-term rehabilitation stays. Without a plan, long-term care expenses can rapidly deplete savings that took decades to build.

Long-Term Care Insurance Options

Traditional long-term care insurance provides a daily or monthly benefit to cover care costs. Premiums are most affordable when purchased in your 50s or early 60s, and become increasingly expensive or unavailable as health issues develop. Hybrid policies that combine life insurance with long-term care benefits have grown in popularity because they provide a death benefit if care is never needed, eliminating the use-it-or-lose-it concern of traditional policies.

Self-Funding Strategies

• Designate a specific pool of assets — earmark a portion of your portfolio specifically for potential care costs
• Health Savings Accounts — if you have an HSA, long-term care premiums and expenses are qualified withdrawals
• Home equity — a reverse mortgage or home sale can fund care, though this affects your estate
• Annuities with long-term care riders — provide guaranteed income that increases if care is needed

The Conversation Your Family Needs to Have

Long-term care planning is not just a financial exercise. It involves conversations about where you want to receive care, who will coordinate it, and what role your family should play. Having these discussions while everyone is healthy avoids crisis-mode decision making later. A comprehensive financial plan should address long-term care as part of the broader picture, not as an afterthought.