You’ve worked hard to build your retirement savings. The last thing anyone wants is for a single, unexpected expense to throw your plans off track. One of the most critical, and most overlooked, pieces of retirement planning is long-term care planning.
Long term care (LTC) covers help with everyday activities (ex. bathing, dressing, or eating) whether that care is provided at home, in assisted living, or in a nursing facility. In Oregon, the average cost for nursing facility care is over $7,100 per month and it’s been climbing quickly, nearly 10% per year. Neighboring states have seen similar increases, with Washington averaging over 13% annually and California more than 16%.
Without a plan, these expenses can put significant strain on even the most carefully built portfolios. The good news? You have options, and the earlier you explore them, the more choices you’ll have.
Three Main Ways to Cover LTC Costs
1) Traditional Long-Term Care Insurance
- Stand-alone coverage for care costs.
- Usually the lowest starting premium of the three types.
- Premiums can rise over time.
- Benefit periods today are typically 2–5 years rather than lifetime coverage.
2) Asset-Based or “Hybrid” Single-Premium LTC
- A one-time lump-sum payment (often $100k–$200k) funds the policy.
- Provides LTC benefits and may include cost-of-living adjustments.
- No ongoing premiums once the lump sum is paid.
3) Life Insurance with a Long-Term Care Rider
- Permanent life insurance that also provides LTC benefits.
- Level premiums, with options to pay over a set period (e.g., 10 or 20 years).
- If LTC benefits aren’t used, a death benefit is paid to your beneficiaries.
- A true LTC rider offers broader coverage than a “chronic illness” rider, which may have more restrictions.
- Whole life designs are highly predictable; universal life designs can have lower starting costs but may require more funding later.
Fitting LTC Into Your Retirement Plan
The right LTC strategy depends on your unique mix of health, assets, and goals. Instead of trying to insure every possible dollar of care, many clients choose to cover part of the potential cost with insurance and rely on their investments for the rest. This balanced approach helps manage premiums while still protecting your retirement savings.
As a guide, many people can expect to pay:
- 4–6% of their portfolio annually* for ongoing premiums, or
- 7–9% of their portfolio once* for a single-premium policy.
*Please note this is an estimate only. A quote based on your specific set of circumstances is necessary for a more accurate cost estimate.
When Should You Start Thinking About Long-Term Care?
Timing matters more than most people realize when it comes to long-term care insurance.
As a general rule, around age 60 is often the sweet spot for applying. Premiums are lower, and qualifying is typically easier before health changes complicate the picture. Waiting too long can limit your options or make coverage harder to obtain.
That said, if you’re five to eight years from retirement, now is a good time to start the conversation — even if you’re not ready to apply. And really, any time retirement planning comes up, long-term care planning should come up alongside it. They’re part of the same picture.
Pre-existing conditions are worth discussing openly with your financial planner. They may or may not affect your ability to qualify for coverage, depending on the condition and the carrier — and that’s exactly why it’s worth having the conversation early, not after the fact. Even if traditional insurance isn’t the right fit, there are other ways to plan for these costs, and running the numbers on how LTC fits into your overall plan is valuable regardless of which path you take.
The goal isn’t to find the perfect policy. It’s to make sure you’ve thought it through — so that if care is ever needed, the plan is already there.
If you’re not sure where you stand, that’s exactly what we’re here for. Schedule a conversation with Ellen and we’ll walk through it together.
Key Takeaways
- LTC costs are rising quickly and can threaten financial security without a plan in place.
- There’s no single “best” policy. The right choice is the one that fits your life and priorities.
- Working with a financial planner means you have a guide working with you through this process. Your LTC plan is designed with your retirement strategy in mind, ensuring you’re prepared without overextending your resources.
At Thistle Wealth, I help clients work with insurance specialists to design LTC strategies that are personal to them so they can move forward with confidence and peace of mind. If you’d like to explore which approach makes the most sense for you, we can walk through the options together and see what fits best.
This article is for general educational purposes only and is not personalized financial, tax, legal, or investment advice. Your situation is unique and may call for different strategies than those described here. Please consult with a qualified professional who can provide guidance tailored to your specific circumstances. All investing involves risk, including potential loss of principal.
