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Retirement income planning isn’t just about making your savings last, it’s about making sure you’re prepared for what life might throw your way.
And one of the most overlooked (yet increasingly urgent) parts of that picture?
Long-term care costs.
Whether it's a few hours of in-home help each week or full-time care in a nursing facility, the reality is clear: long-term care isn’t cheap, and it’s getting more expensive every year.
If you’re in your 50s, 60s, or even early 70s, it’s time to build long-term care into your retirement strategy before it becomes a crisis.
Why Long-Term Care Costs Are Rising Faster Than You Think
Long-term care costs have been steadily climbing over the past decade, and there’s no sign of them slowing down.
Today, the median cost for a private room in a nursing home is over $116,000 per year, according to Genworth’s 2024 Cost of Care Survey. Even assisted living averages over $60,000 per year, and in-home care, once considered the “affordable” option, now runs upwards of $30 to $35 per hour in many areas.
Why the surge,
There are two major drivers:
- An aging population. With more Baby Boomers reaching their 80s every year, demand for care is skyrocketing.
- A nationwide caregiver shortage. Fewer trained professionals are available to provide care, which pushes labor costs (and service costs) higher.
Retirement income planning must take these escalating costs into account, because hoping you’ll “just stay healthy” isn’t a strategy.
The Real-World Financial Impact of Needing Care
Retirement income planning gets trickier when health issues start affecting your ability to live independently.
Let’s say you or your spouse needs home care five days a week. At $35 per hour for just four hours a day, that’s over $36,000 annually, and Medicare likely won’t cover any of it unless it’s skilled (not custodial) care prescribed after hospitalization.
Now imagine needing a full-time caregiver or transitioning to an assisted living facility.
It’s not just the cost, it’s how those costs compound over time.
If your retirement plan assumes steady, predictable spending, long-term care costs can throw it off balance, forcing early withdrawals, selling off investments during down markets, or even reducing your lifestyle.
That’s why proactive planning matters.
Building a Plan That Protects Your Income and Your Independence
Retirement income planning that includes long-term care isn’t just about protecting your money. It’s about protecting your choices, your comfort, and your family.
Here are four strategies that can help:
1. Start by Understanding Your Personal Risk
Retirement income planning starts with clarity, and that includes assessing your personal risk of needing care.
About 70% of Americans over age 65 will need some type of long-term care during their lifetime. But factors like family health history, chronic conditions, and whether you’re single or married can influence how (and when) to prepare.
If you’re married, one spouse might stay healthy while the other needs care. Your plan should account for how to fund care for one person while preserving income for the other.
2. Evaluate Long-Term Care Insurance Carefully
Long-term care insurance can be a smart way to transfer some of the risk, if the policy fits your needs and budget.
Traditional policies offer set daily benefits for a number of years, while hybrid policies (often combined with life insurance) are gaining popularity. They guarantee some return of premium, even if you never need care.
The key is reviewing these options early. Most policies require good health to qualify and become much more expensive after age 65.
A fiduciary advisor can help you analyze whether a policy makes sense in your overall retirement income planning, or whether self-funding from your portfolio is a better fit.
3. Consider a “Care Bucket” in Your Retirement Portfolio
Retirement income planning should include a dedicated “care bucket”, a portion of your savings earmarked specifically for future care costs.
This could be held in a conservative investment account or a separate annuity, structured to grow until you need it.
The advantage? You protect your core lifestyle income while still preparing for unexpected expenses.
Plus, a clearly designated care fund can reduce emotional strain for your family, who may otherwise struggle with how to pay for needed services.
4. Explore State Programs and Tax-Smart Funding Options
Depending on your state, you may have access to Long-Term Care Partnership Programs that reward private insurance policyholders with asset protection.
In addition, Health Savings Accounts (HSAs), Roth IRAs, and even life insurance with long-term care riders can all play a role in your plan, if coordinated correctly.
This is where working with a fiduciary advisor becomes crucial. Your care strategy isn’t just about numbers—it’s about sequencing, taxes, timing, and flexibility.
Don’t Forget the Impact on Your Family
Retirement income planning also means protecting your loved ones, from financial, emotional, and physical stress.
Far too many retirees assume a spouse or adult child will “just take care of them.”
But informal caregiving can come at a heavy price. Time off work, caregiver burnout, and strained family relationships are common outcomes.
Planning ahead means your family can support you without being your only support system.
The Bottom Line: Peace of Mind Comes from Preparation
Long-term care costs may be rising, but you don’t have to face them alone or unprepared.
By incorporating care planning into your broader retirement income planning, you preserve the freedom to choose the care you want, protect the assets you’ve built, and reduce the burden on your loved ones.
At Haywood Wealth Management, we specialize in helping high-net-worth individuals build flexible, tax-efficient retirement income plans that account for both the expected and the unexpected.
If you’re ready to explore your options, we invite you to schedule a Retirement Pathfinder Analysis, a personalized session to help you map out a strategy that gives you confidence for every stage of retirement.
👉 Schedule Your Retirement Pathfinder Analysis to get expert guidance and a plan designed to support the life you’ve worked so hard to create.
Your legacy matters. Let’s make sure it’s protected, personalized, and built to last.
