The Finance of Longevity

Building An Income Safety Net

How long-term-care insurance can help prevent the erosion of your clients’ retirement plans

by Samantha Stein

Ms. Stein is an online content manager for Association for Long Term Care Planning (ALTCP). Visit

Saving for retirement is not the strongest suit of most Americans. They feel that their efforts are not enough to meet the financial realities of retirement. In fact, nearly 8 in 10 of Americans are “extremely” or “somewhat” concerned about living a comfortable retirement based on the new data from Northwestern Mutual.

 Their fears continue to reflect on their shortcomings in facing retirement through these alarming numbers:

One in five Americans (21%) have NO retirement savings at all

One in three Baby Boomers (33%), the generation closest to retirement age, only have between $0-$25,000 in retirement savings

Three quarters of Americans believe it is «not at all likely» (24%) or only «somewhat likely» (51%) that Social Security will be available when they retire

Nearly half (46%) of adults have taken no steps to prepare for the likelihood that they could outlive their savings

So, how can Americans allay all these fears?

They can start by exploring certain areas that are often overlooked when planning for retirement like rising long term care costs in retirement.

The cost of long term care based on ALTCP’s table of average annual cost of care revealed that a private room in a nursing home costs $97,455 while a semi-private room in a nursing home costs $85,775.

These costs increase their chance of outliving their savings if they don’t find a long-term solution for this early. It’s rarely too late to start planning for retirement. The problem lies on how American are willing to commit to their strategies, in this case including long term care in their plans and how motivated they are to reach their goals.

Long-term care insurance can help in doing the heavy lifting to fortify eroding retirement plans. How? Here are the things that long-term care insurance can bring on the table.

1. Protect your Assets
Long-term care insurance protects your assets and retirement savings from extremely expensive cost of care. Every year the cost of care increases because of inflation. By 2022, the average annual cost of a private room in a nursing home will be $112,977 from $97,455 while the average annual cost of a semi-private room will be $99,437 from $85,775.

These are just the estimate costs and they can go higher or lower depending on the state you live in. Nevertheless, these numbers are still alarming especially if you haven’t included them in your retirement plan.

Looking at this table below, you can get a rough of what you’re going to spend when you buy coverage for long term care as opposed to paying for care expenses out-of-the-pocket.

The earlier or younger you buy the more affordable your premiums will be. Aside from age and health, there are also other factors that affect the LTCi premiums. You can save a lot of money and you can maximize the benefits of your policy when you purchase early.

2. Avoid Becoming a Burden to your Loved Ones
Did you know that there are about 43.5 million unpaid caregivers in the United States today?
Most Americans who need long term care turn to their loved ones to take care of them because they failed or chosen not to prepare for this earlier. While it is fulfilling, caregiving also has negative effects that will eventually take a toll on them emotionally, physically and financially. Here are some of the effects of family caregiving.

  • 1 in 5 caregivers experiences high level of physical strain
  • 1 in 5 caregivers experiences financial problems
  • 2 in 5 caregivers experience emotional stress
  • 3 in 5 working caregivers have experienced at least one impact in their employment situation
Most Americans who need long term care turn to their loved ones to take care of them because they failed or chosen not to prepare for this earlier. While it is fulfilling, caregiving also has negative effects that will eventually take a toll on them emotionally, physically and financially

Take the necessary steps to come up with a sound retirement plan by getting coverage for long term care to protect your loved ones from the burden of providing or paying for care.

3. Insurance Riders Help Maximize your Benefits
Having the liberty to personalize your coverage through riders is one of the perks of long term care insurance that everyone should take advantage of. Insurance riders allow you to maximize your policy by having protection against inflation, receiving cash benefit even if you’re not receiving care, sharing your benefit with your spouse and more. However, adding riders is costly so it’s recommended to learn the ins and outs of these add-ons first to find what rider they will most likely benefit from. These are some of the highly recommended LTCi riders you should explore.

  • Inflation Protection – This is a must-have rider that increases your daily benefit amount to keep up with the rising cost of long term care
  • Cash Benefit – This popular add-on gives the policyholder partial or additional cash daily regardless whether the policy received care or not
  • Spousal Shared Care – This rider is perfect for couples since they can share the pool of benefits with one another
  • Guaranteed Insurability Option – Allows the policyholder to buy additional coverage without going through the underwriting process

4. Preserve Quality of Life
Older adults today will take 4 trips per year on average and rank travelling as their number one leisure activity. Now, they have more time to travel after decades of taking short trips and making the most of limited vacation days.

Baby boomers are actually shaking up the travel industry by taking advantage of this golden opportunity to see different parts of the world at their own pace and with a more flexible budget. Here are the travel patterns of baby boomers this year.

  • 38% of baby boomers have created a bucket list they wish to do in retirement
  •  53% of baby boomers prefer domestic travel while 47% prefer to venture out of the country
  • Most baby boomers prefer to travel during summer or spring
  • Around 69% of baby boomer that prefer to travel with their significant other or spouse

By having long term care insurance, older adults now have peace of mind knowing that their long term care needs will be covered. They can use their retirement funds without holding back to preserve their quality of life by visiting new places, learning new cultures and meeting new people. They can finally do things they’ve longed to do when they’re still working and saving for retirement.

5. Leaving a Legacy
Leaving a legacy to your children and grandchildren is one of the ultimate dreams of retirees. But since the cost of long term care facilities and services continue to rise, the possibility of leaving an inheritance to your loved ones is hazy.
Through long term care insurance, it is possible to show generosity to your loved ones while growing old. Inheritance doesn’t always happen when someone passes away. In fact, 17% of inheritances happen while the giver is still alive and this is because of longevity and also because of the choice of the giver to witness their loved ones benefit from their inheritance.

If you’re not considering including long-term care insurance in your retirement plan, better do it now before it’s too late. The rising cost of long term care is too expensive that relying on your fixed retirement income alone will more likely be not enough to cover your care expenses.

What’s worse is you’ll put the burden to your loved ones to take care of you or to pay for your long term care needs. So, boost your retirement plan now with long-term care insurance to avoid financial difficulties later on, spare your loved ones from devastating cost of care and to enjoy your retirement. ◊