How to Protect Your Finances: Protect Your Retirement Savings by Planning for Long-Term Care

In this series of blog posts we continue to provide tips to help protect your finances. In this post we cover the importance of protecting your retirement savings by planning for your long-term care.

One of the greatest risks to your finances in retirement may be the cost of long-term care (LTC). It can be expensive and the odds of you needing it are high. About 70% of people turning age 65 are expected to need LTC services at some point in their lives, according to the U.S. Department of Health and Human Services.

Preparing for the cost of LTC now may help you afford quality care in the future and reduce the risk of LTC expenses draining your retirement savings prematurely. There are several ways to go about this.

One approach is to simply factor potential LTC costs into your financial plan and save enough money to cover LTC services on your own. The upside to this approach is that if you do not need LTC services, the money you set aside for LTC will eventually go to your heirs.

Or you can purchase a traditional LTC insurance policy that will help you cover the cost of care in your home, a nursing home, or certain other settings. If you decide to go this route, keep in mind that people generally buy this type of insurance in their fifties and sixties, while they are still in good health and premiums are still relatively low.

A hybrid LTC/life insurance policy may also be an option. A hybrid policy typically pays benefits for LTC services and a death benefit to your beneficiary when you pass away, reduced by any LTC benefits you received.

Adding an LTC rider to a life insurance policy may also be an option. LTC riders generally allow you to use part of the death benefit during your lifetime to pay LTC expenses with the remaining death benefit generally paid to your beneficiaries after you pass.

Copper Leaf Financial is a fee-only, fiduciary financial advisor firm with offices in the Burlington and Rutland Vermont marketplaces. We develop a customized wealth management plan designed to integrate every aspect of your financial life. This is "true wealth management" - a holistic, all-encompassing approach that goes beyond just investment advice. Call our office at 802.878.3731 to set up a time to meet and discuss your specific situation.

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Article published in July 2019 edition of Eye on Money. If you would like to be added to our mail list please email