For many retirees, the biggest financial threat isn't market volatility, inflation or taxes. It's the staggering cost of long-term care.

According to recent national estimates, a private room in a nursing home can easily exceed $100,000 per year in many parts of the country, and those costs continue to rise.

A prolonged illness, dementia diagnosis or extended nursing home stay can rapidly drain a lifetime of savings — even for families who believed they planned well.

That's why more retirees are exploring a legal strategy known as a Medicaid Asset Protection Trust (MAPT).

When structured properly and implemented early enough, this type of trust might protect assets from being consumed by long-term care expenses, which helps preserve financial security for a surviving spouse and future generations.

Understanding the problem

Many Americans mistakenly assume Medicare will cover long-term nursing home care. However, Medicare coverage is generally limited and temporary. After short-term rehabilitation benefits expire, families often find themselves responsible for the full cost of care.

At that point, Medicaid becomes the primary government program that assists in covering long-term custodial care.

However, qualifying for Medicaid requires applicants to meet strict income and asset limitations.

Without proper planning, this eligibility requirement often means spending down savings, investment accounts and other assets before benefits begin.

For married couples, the consequences can be particularly painful. One spouse might require nursing home care while the healthier spouse remains at home trying to maintain financial stability.

Families are regularly shocked to learn how quickly years of retirement savings can disappear.

What is a Medicaid Asset Protection Trust?

A MAPT is an irrevocable trust designed to remove certain assets from an individual's countable estate for Medicaid eligibility purposes.

Typically, assets such as a home, investment accounts or other nonretirement assets are transferred into the trust. Because the trust is irrevocable, the person creating it no longer directly owns those assets.

That loss of direct ownership is precisely what can help create protection.

After a specified period — generally five years under current Medicaid "look-back" rules — assets inside the trust might no longer count toward Medicaid eligibility calculations.

In simple terms, if you start planning early enough, the assets placed into the trust could be preserved rather than being spent on nursing home bills.

Timing matters

One of the most important aspects of Medicaid trust planning is timing.

Medicaid currently applies a five-year look-back period, which means that transfers into a MAPT made within five years of applying for Medicaid might trigger penalties or delays in eligibility.

Because of the length of the look-back period, using a MAPT to improve Medicaid eligibility works best when families plan for a health crisis well in advance.

Unfortunately, many people wait too long. They assume long-term care is a distant possibility — until a stroke, fall or cognitive diagnosis suddenly changes everything.

Planning earlier provides more flexibility and significantly more protection opportunities.

How it could help a surviving spouse

One of the lesser-known advantages of Medicaid planning involves protecting the financial stability of the healthy spouse at home.

When one spouse enters a nursing facility, the other spouse — often called the "community spouse" — might still need income and assets to maintain their lifestyle, pay property taxes, cover insurance costs and continue living independently.

Without planning, a severe long-term care event can create financial hardship for the community spouse.

A properly designed MAPT might help preserve family assets for the surviving spouse while still positioning the ill spouse to potentially qualify for Medicaid assistance later.

For example, a home transferred into properly structured trusts might help shield the property from nursing home spend-down requirements and in some cases, from Medicaid estate recovery after death.

That can be critically important for surviving spouses who could otherwise face pressure to liquidate investments or sell the family home.

Estate recovery concerns

Another issue many families don't discover until too late is Medicaid estate recovery.

After a Medicaid recipient dies, states are often required to seek reimbursement for benefits paid during life. In many cases, this recovery effort can involve the family home or other remaining assets.

Proper trust planning might help reduce or avoid some of those recovery risks, depending on state law and how the trust was structured.

For families hoping to preserve assets for children or grandchildren, this can be a major consideration.

MAPT is legal planning — not hiding assets

Some people hear the phrase "asset protection" and assume it involves hiding money or exploiting loopholes.

That is not what Medicaid trust planning is.

These trusts are established under existing federal and state laws and are commonly used as part of legitimate elder-law and estate-planning strategies. The key is making sure the trust is drafted correctly by an experienced elder-law attorney and coordinated with an overall retirement and tax-planning strategy.

Families should also understand that irrevocable trusts involve tradeoffs. Once assets are transferred, the creator generally gives up direct access and control of those assets, which is why careful planning is essential.

The bottom line

Long-term care costs have become one of the greatest financial risks for retirees today. A nursing home stay can quickly erode decades of disciplined saving and investing.

For families who want to plan, a Medicaid Asset Protection Trust might offer a way to help preserve assets, protect a surviving spouse and create greater peace of mind.

But timing matters — the earlier families begin the conversation, the more options they have. Waiting until a health emergency occurs can dramatically limit planning opportunities and leave families facing avoidable financial stress during an already difficult time.

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• Long-Term Care Insurance: 10 Things You Should Know
• I'm a Financial Planner: Here Are 3 Ways to Plan for the Soaring Cost of Long-Term Care
• How to Help Prevent Taxes from Taking a Massive Bite Out of a Special Needs Trust
• The Illinois 'Cliff Tax': A Single Dollar Could Cost Families Hundreds of Thousands

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Shopping for furniture or a new car is fun, or at least it can be. Shopping for long-term care insurance is, well, less fun.

But it's an exercise you may need to go through eventually, given that Medicare won't cover the cost of long-term care. And if you don't buy insurance, you could face very high costs, depending on the type and amount of care you need.

Data from CareScout puts the yearly median cost of a non-medical in-home caregiver at $80,080 in 2025. For assisted living, you may be looking at $74,400 a year.

Gasping already? Wait, it gets worse.

If you end up needing a nursing home, you could be looking at $114,975 a year for a shared room and $129,575 per year for a private room. And these are just typical costs.

Reading between the lines, if you want a few extra amenities at a nursing home or assisted living facility, you could pay even more. You might also pay more by virtue of your ZIP code.

That's why it's a good idea to put long-term care insurance in place. But it's also important to buy it at the right age and approach that decision strategically at different ages.

Buying long-term care insurance at 50

Age 50 marks a major retirement-planning milestone: you can start making catch-up contributions to an IRA or 401(k). Reaching that age might also prompt you to consider long-term care insurance. But you may have one big question on your mind: Am I starting too soon?

Michael Murray, AIF, CPFA, and President at Peabody Wealth Advisors, says no.

"The window between 50 and 60 is really the sweet spot for long-term care planning," Murray insists. "You're still insurable, premiums are manageable, and you're making a proactive decision rather than a reactive one."

Phillip Battin, President and CEO of Ambassador Wealth Management, agrees.

"Consumers in their early 50s are generally in the best position to secure coverage because premiums are lower and underwriting is more favorable," he says. "At that stage, buyers should focus on affordability over the long term and whether inflation protection is sufficient to keep pace with rising care costs decades into the future."

Inflation is an extremely important factor to be mindful of when buying long-term care insurance at or around 50, since healthcare costs can rise faster than average costs. CareScout found that the median cost of assisted living rose 5% between 2024 and 2025 alone.

When reviewing your policy options, check for an inflation rider or cost-of-living adjustment. Just know that the more generous the inflation adjustment, the higher your premiums might be.

Of course, the tricky thing is that at 50, you may be in good enough health that it's hard to imagine ever being in a position where you'd need long-term care. But Murray says that attitude could lead you to delay an extremely important financial decision.

"Many Gen X families are already experiencing long-term care firsthand, helping aging parents while still supporting their children," he says. "Most people don’t think about long-term care until they’re in the middle of it with a parent or loved one. By then, the options are usually more limited and more expensive."

Buying long-term care insurance at 55

Many Gen Xers in their mid-50s are already facing an uphill battle with retirement planning. A good 54% think they won't be financially prepared to stop working when the time comes, according to Northwestern Mutual.

Given that only 16% of Gen Xers feel they've saved enough for retirement, according to Schroders, this cohort generally isn't in a strong position to self-insure for long-term care. So if you've reached your mid-50s without a particularly robust nest egg, it's important to look at long-term care insurance options sooner rather than later, Murray says.

"Gen X is arguably the most exposed generation when it comes to long-term care," Murray explains. "They have fewer pensions, less margin for error, and more competing financial priorities."

Even scarier is that Murray is seeing more and more cases where just a few years of care can erase decades of savings.

On a positive note, age 55 is by no means "late" in the context of buying long-term care coverage. In fact, Battin calls it the “sweet spot."

"Prospective buyers should ask themselves an important question," Battin says. "If they delay another five or 10 years, will coverage still be affordable, or obtainable at all? Health changes can quickly impact eligibility, and delaying the decision can significantly increase premiums."

Findings from the American Association for Long-Term Care Insurance (AALTCI) underscore the importance of signing up early.

The group found that in 2024, the average annual premium for a $165,000 policy with no inflation adjustment was $950 for a single male when purchased at age 55. That same policy purchased at age 60 carried a $1,200 premium instead. At 65, it spiked to $1,700.

Buying long-term care insurance at 60

At age 60, long-term care premiums can start to soar. But it's certainly not too late to buy a comprehensive policy, Battin insists.

At that point, though, Battin says the conversation shifts from optimization to risk management.

"Underwriting standards typically become more stringent, premiums increase significantly, and buyers may be forced to balance desired coverage levels with overall affordability," he cautions.

Battin also says that some buyers at 60 may want to consider hybrid life and long-term care policies.

"These products appeal to many consumers because they address the use it or lose it concern associated with traditional standalone long-term care insurance," he explains. "If care is needed, the policyholder can access benefits to help cover expenses. If not, beneficiaries still receive a death benefit."

As with buying a traditional long-term care policy, if you're considering hybrid coverage, Battin suggests favoring insurance that offers an inflation rider.

Even at 60, "Without that protection, policyholders risk purchasing coverage today that may be inadequate when they actually need care," he insists.

Buying long-term care insurance at 65

If you're first starting to shop for long-term care insurance at 65, you may be a little late to the party.

As Battin explains, "By age 65, long-term care insurance becomes a far more selective and expensive purchase. Approval is no longer guaranteed, and many applicants face significantly higher premiums or outright declines due to health conditions."

Battin also warns that if you're buying long-term care coverage for the first time at 65, you may end up "forced into partial self-funding strategies or reduced coverage levels."

That may explain why only 15% of U.S. adults ages 65 and over have long-term care insurance, according to the Center for Retirement Research at Boston College. That's a problem, because an estimated 70% of adults who reach age 65 end up needing some type of long-term care.

The AALTCI also reports a denial rate of about 38% among people who apply for long-term care insurance between ages 65 and 69.

"Unfortunately, this is also the age when the financial consequences of inaction become most apparent," Battin says. But that doesn't mean it isn't worth applying at 65. You may just need to gear up to pay more.

The bottom line: apply sooner if you want that coverage

Although buying long-term care insurance in your 50s means paying those premiums for more years, waiting is clearly risky. If you've saved millions and can fall back on self-insuring, you might consider waiting. Otherwise, you may want to make long-term care insurance shopping a priority during the first half of your 50s, along with boosting retirement plan contributions and paying off debt.

"Long-term care planning is one of the most overlooked components of retirement preparation, and, if ignored, can also be one of the most financially disruptive," Battin says. "The cost of waiting is often far greater than the cost of planning."

Read More

• How to Pay for Long-Term Care
• My Beloved Husband Has Early-Stage Dementia. He Is 'Doing Well,' but How Do I Protect Our $1.6 Million Savings Right Now?
• The Average Cost of Healthcare by Age and US State
• Healthcare Costs in Retirement: Budgeting for a Healthy Future

For most of my life, I've worked as an innovator in the financial services space, with a particular focus on life insurance and annuity products.

For 40 years, that was my job and specialty. One of my "first of a kind" product inventions — the Accumulator — offered downside protection on the income that a variable annuity could provide and eventually created a $1 trillion industry.

In my current role as an investment adviser focused on retirement planning, my innovations address the current needs of retirees regarding greater longevity, concern about Social Security, high inflation, taxes and increasing medical and long-term care costs. As this survey of retirees by Schroders details, those are the top concerns of many people in retirement.

The concerns about costs of long-term care are about to increase even further, with a new federal Medicaid rule that, beginning in 2028, will cap allowable home equity at $1 million. This will most directly affect middle-class homeowners in high-cost markets.

Under current rules, states set the amount of equity that a homeowner could maintain and still qualify for Medicaid LTC coverage. It ranged from about $750,000 to $1.13 million — and it was adjusted every year for inflation. In 2028, the allowable equity will be $1 million for everyone (except farm families), and it will not be indexed for inflation.

Of course, there are other related costs that Medicaid will not cover, like assisted living or services like a home aide, unless the retiree satisfies a means test.

Change in retirement planning is necessary

As it happens, I've been working on a new design for retirement planning that addresses long-term care costs. It does require, among other things, a breakdown of the silos between investments, annuities and housing wealth.

This design change doesn't focus on wealthy or lower-income retirees, but rather, the broad group of so-called mass affluent. The most popular planning approach for this group of retirees is to invest in different investment portfolios and withdraw 4% to 5% per year, increasing by inflation.

Intuitively, most retirees know that they can do a lot better not only in the level of income, but also in the reduction of risk and taxes, and in greater liquid savings.

On the other hand, most don't fully appreciate the potential costs of long-term care. Not surprisingly, those who live longer are more likely to need long-term support and services like nursing home care.

One interesting statistic is that 50% of retirees age 85 and over will need long-term-care services, which are in the $80,000-to-$150,000-per-year range, with a historical increase rate of 3% to 5% per year.

Our analysis suggests these costs may represent nearly 25% of the average $2 million in net worth split between a rollover IRA and value of a home. Without planning for those costs in advance, the sale of the home, with the related closing costs and taxes, may be required.

Here are the retirement planning design changes we developed.

Consider all major asset classes, including housing wealth and lifetime annuities

In figuring out a solution to these retirement challenges, whether or not Medicaid is an option, it made sense to look at all of a client's net worth. That struck a chord when housing wealth was reported as 50% of our sample retired client's wealth.

Importantly, the innovations needed to be doable with no regulatory change or product refinement — and simply in the retirement planning space. It had to be accomplished through our planning algorithm and executed by an adviser through partnering with different product providers.

The first step was how to include housing wealth in the planning. The second was the integration of the most logical but underutilized retirement product — lifetime annuities.

The key for me was to consider them together rather than separately. Why together?

That togetherness answers the following key objections that often are raised about each product individually (also, see my article Transform Your Retirement Plan With This Powerful Combo):

Housing wealth. If using a reverse mortgage such as a home equity conversion mortgage (HECM) to unlock this wealth, the objections are the costs — and the risks if you borrow too much. (See my article How Your Home Can Fill Gaps in Your Retirement Plan.)

Lifetime annuities. A qualifying longevity annuity contract (QLAC) can help define a better retirement by deferring taxable IRA distributions and delivering guaranteed lifetime income at an age you select. (See A QLAC Does So Much More Than Simply Defer Taxes.)

Despite a lifetime payout for a 67-year-old man of, say, $50,000 per year on a $100,000 premium, retirees often object to the lack of liquidity.

In our development phase, we said, "HECM, meet QLAC." Individually, both HECM and QLAC can be helpful in their own ways.

Together, we call it HomeEquity2Income, and the combination can help you stay in your home as you build liquidity for possible long-term care costs, as well as boost income.

It also means you don't have to spend down the savings in your rollover IRA to qualify for Medicaid.

Here's how we put them together:

1. Set up a line of credit through HECM and purchase QLAC from rollover IRA savings:

2. Analyze standard configurations under HECM and QLAC and why they may not work for your retirement plan. The charts below demonstrate results from both a HECM and a QLAC on a stand-alone basis, as often presented to retirees.

In our view, while both are reasonable designs, they are not used most effectively for retirement purposes.

3. Use a new algorithm for a combination of a HECM and a QLAC (HomeEquity2Income, or H2I) to meet twin retiree objectives of increasing income and increasing liquid savings. At the same time, establish a building block for your retirement plan.

Testing H2I for legacy and historical rates

While income and liquid savings are two important elements of H2I, retirees may also consider the effect of H2I on the legacy they're providing to their spouse and other family members.

Also, the broad message for planning is not to try to predict the exact amount of savings or legacy for each homeowner, but to demonstrate the possible impact of the market performance on your own plan.

The illustrations above were based on industry standard fixed rates but, as covered in my article Treat Home Equity Like Other Investments in Your Retirement Plan: Look at Its Track Record, we believe it important to be able to Illustrate benefits based on historical performance.

By using historical rates, we are looking at the interplay of various product elements with real-world performance.

Looking at the expanded example of this combination, here's what we learned about each component:

• HECM's liquid savings grow dramatically when you stop drawing down from a line of credit and use a part of QLAC income to pay down the loan balance
• QLAC may be purchased in a laddered format to create increasing income before age 85. In limited situations, QLAC income may be accelerated before its original income start age
• And in combination, HECM and QLAC offer significant tax advantages, particularly in early retirement years

Use H2I as building block in a retirement plan with other savings

With H2I in place, the question becomes how we might further combine it with other retirement savings. Let's look at adding to H2I our sample retiree's rollover IRA savings ($800,000 after QLAC premium), personal savings ($1 million) and Social Security payments ($36,000 starting at 67).

While portfolio allocation is often a very personal decision, here's what our starting plan reflects:

• Allocation of $800,000 in IRA between stocks (growth) and bonds in a balanced portfolio
• Allocation of $1 million in personal savings among stocks (high dividends), bonds, and SPIA (single-premium immediate annuity)

What is the starting income this plan will support? Using H2I as a building block and the Go2Income planning algorithm, the starting income is $133,000. The plan assumes that income will grow at 2% per year.

With the $36,000 of Social Security benefits, the total starting income is $169,000. The retiree can, of course, refine the plan to increase income and lower the substantial amounts of legacy and liquid savings.

Long-term care scenario testing

The next step in the process was to test various H2I scenarios as they related to covering long-term care. That's particularly timely with greater longevity and increased responsibility of retirees, leading to coverage of more long-term care costs.

• The economic return for H2I in the 3.5% to 4.5% range is attractive, recognizing the major asset is the housing wealth, assuming a growth rate of around 4%. In one sense, the higher crediting rate on a QLAC is offsetting the higher HECM interest rate.
• In the scenarios above, we are able to generate additional income and cover $100,000 in LTC costs over five years from age 85 to 89. We would need to do some stress-testing for larger or different patterns of LTC expense. Of course, we should consider the resources from other retirement savings.
• The income tax effects are quite positive with all HECM drawdowns tax-free, QLAC income deferred until received and LTC costs being tax deductible. (See my article The 9% Solution: An Expert Guide to Retirement Tax Breaks That Could Cut Your Tax Rate Nearly in Half.)

H2I for this sample investor can cover a reasonable amount of LTC costs while delivering higher income. The final planning steps include further testing to confirm results. Including a measure of income taxes, market risk and IRR (internal rate of return) before and after tax, we look at three qualities of the plan in our evaluation:

• Inflation protection
• After-tax income
• Stock market risk

For retirees, it means they no longer need to keep an eye on new caps for home equity or spend down all their other assets to qualify for Medicaid's LTC benefits.

Even for those who never considered Medicaid as an option, H2I provides an easier way to create wealth from retirement savings while aging in place.

Unlike product innovation in the past, these design changes don't require regulatory change, product pricing or design changes, or special servicing. Just stack these building blocks and assemble them as the plan instructs. Visit Go2Income, where you can start building your own plan.

Related Content

• The 75% Safety Net: How All-Asset Retirement Planning Helps Reduce Your Investment Risks
• It's Time to Redefine Retirement for Retirees With $500,000 to $5 Million
• Unlock Housing Wealth and Tax Benefits by Adding Lifetime Annuities to Your Retirement Plan
• Does Your Retirement Plan Ignore Half of Your Net Worth?
• The 9% Solution: An Expert Guide to Retirement Tax Breaks That Could Cut Your Tax Rate Nearly in Half

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Editor’s Note: This article is the third in a five-part special report exploring the connection between your money and your health. Other stories in the series look at 15 ways to lower your healthcare costs, how your finances affect your physical and mental health, managing the costs of mental health treatment and what’s new in Medicare this year.

In 2019, Thomas Jefferson Trombino, then 93, moved from his home in New Jersey to an assisted-living facility in Temecula, Calif., near his son Dennis and daughter-in-law Kelly. The $4,390 a month he received from Social Security and benefits earned as a World War II veteran covered the bulk of his costs, and the younger Trombinos were happy to pay for incidentals, such as toiletries, laundry service and snacks.

But as the older Trombino’s health declined, the cost of care grew, leaving Kelly and Dennis to pick up an increasing share of the bills. By the time Thomas passed away at age 98 in 2024, the couple, who own a pension-plan consulting business, were spending about $3,000 a month.

Their total outlay for Thomas’s long-term-care needs over the four and a half years he needed help: more than $50,000, with two of Dennis’s siblings chipping in an additional $31,000.

"My father-in-law was a really nice guy, but he never planned for retirement or his health needs as he got older, and he never expected to live so long, either," says Kelly, 65. "He thought he was going to be fine on Social Security and Medicare."

Like the Trombinos, millions of Americans have found themselves thrust into the role of physical or financial caregiver — or both — for family members who didn’t expect to need long-term-care assistance, put off planning, incorrectly assumed Medicare would cover the costs or simply never had the financial means to save for their future health needs.

Expectations, meet reality.

Eight in 10 people age 65 and older will need long-term-care help during their lives, most commonly with tasks such as managing their finances, transportation, housekeeping, meal prep, organizing medication and dealing with health care providers, according to the Center for Retirement Research at Boston College (CRR).

About 40% will require more intense assistance for a year or longer with two or more activities of daily living, such as bathing, dressing, eating or going to the bathroom, or will have cognitive issues, such as dementia.

Yet fewer than half have savings set aside to assist with the cost of this care, and only 15% have long-term-care insurance to help pay the bills. Even people who have planned may be unprepared for the full cost.

Only about four in 10 households correctly estimate nursing home fees, and far fewer know the price tag for home care or assisted living, CRR research shows.

It’s lofty: The median monthly cost of nonmedical home care (44 hours a week) ran $6,673 last year; $6,200 for assisted living; and $9,581 for a semi-private nursing home room, according to the CareScout Cost of Care Survey.

"No one likes to think about the physical, cognitive and emotional challenges of aging," says Melissa Brennan, a certified financial planner in Plano, Texas. "Procrastination, though, usually results in relying on family members to be caregivers, morphing a one-generation problem into a two-generation problem and having a potentially devastating impact on family relationships and finances."

While the Trombinos could handle paying for long-term care for Dennis’s father without dramatically changing their lifestyle, they did cut back on vacations, dining out and even saving for retirement during this period to help foot the bills.

For many families managing long-term care for an older loved one, the impact is more painful. More than half have had to cut back on basic household spending; four in 10 have drained their savings; a third have gone into debt; and one in three have delayed retirement, according to a study by KFF, a health policy research nonprofit.

To avoid that fate for your family, be proactive about planning for your potential long-term-care needs now — before you require help. “The right strategy depends on how much risk you can afford to take on, how strongly you prioritize legacy versus lifestyle, and how much certainty you want around future health care costs," says New York City CFP Georgia Lord.

From traditional long-term-care insurance to newer alternatives to self-funding, here's a look at your options.

Long-term-care insurance

Just as auto or homeowners insurance can help keep a collision or a house fire from draining your savings, a long-term-care policy can help prevent your future health needs — say, a costly nursing home stay or extended care at home while you're recovering from an illness — from undermining your financial security or creating a burden for your family.

Traditional long-term-care policies usually provide coverage for a set period (say, three or five years) for care received in a nursing home, an assisted-living facility or adult daycare center, or for certain health services received at home.

Some policies provide unlimited or guaranteed lifetime payments, but a daily or monthly maximum amount toward care costs is more common, typically paid until the policy’s benefit is exhausted or the policyholder dies or gets better.

Benefits usually kick in, after a waiting period that may stretch 90 days or more, when you can no longer perform at least two activities of daily living without help, such as eating or getting dressed, or you become severely cognitively impaired.

The big sticking point is cost, both for policyholders and the insurers providing coverage. In fact, many insurers left the market in recent years as profits shrank, because they’d severely underpriced earlier policies based in part on faulty information about policyholders’ longevity and policy lapse rates.

The handful of companies that remained hiked premiums sharply on new policies and pushed state authorities to allow steep increases for existing policies as well. For instance, a survey of insurers conducted by the consulting firm Milliman shows that the average approved premium increase in 2024 was 28% for existing long-term-care policies.

Policies bought today are less likely to face the same steep premium hikes as in the past, as insurers now have more-accurate claims data on which to base premiums, industry experts say.

But insurers have also worked to limit losses by narrowing the types of health conditions and ages they’ll accept for coverage. For instance, you’ll likely be denied if you use a walker, have certain cancers, recently had a stroke, or have Alzheimer’s or Parkinson’s disease, according to the American Association for Long-Term Care Insurance (AALTCI), an insurance education group.

To help avoid being rejected for coverage and to lower premiums, many experts recommend you buy coverage before age 65, and ideally in your fifties, when you’re usually healthier. The price difference is huge: In 2025, a 55-year-old woman buying a long-term-care policy with $165,000 of coverage typically paid $1,500 a year in premiums, compared with $2,700 at age 65.

"The number-one mistake people make is waiting too long," says Jesse Slome, executive director of the AALTCI. "At age 70, half the people who apply are denied for health reasons."

You can also help keep costs down by forgoing inflation protection — a feature that increases the policy’s benefit by 1% to 5% a year to offset rising medical costs. A policy worth $165,000 in coverage for a 55-year-old man ran $950 annually last year, for example, but one with 2% inflation protection typically cost $1,750.

Similarly, opting for a set time period for benefits — on average, women need long-term care for 3.6 years and men need it for 2.5 years, data shows — is less expensive than a policy with lifetime or unlimited benefits. In general, experts advise, don’t plan for the worst-case scenario.

"If you try to buy a long-term-care policy that covers every single contingency and every single cost you might incur, you won’t be able to justify the premium, and you’re going to be leaving a lot of money with the insurance company," says Jerry Vanderzanden of the Life Insurance Consumer Advocacy Center.

Short-term insurance

Depending on where you live, short-term-care insurance, which typically covers care for up to a year, often with no waiting period, may be worth considering.

"One year may seem like nothing, but for many people, that’s all the coverage they’re going to need," Slome says. For instance, 43% of long-term-care claims made to Genworth Life Insurance Company end within a year.

The policies cover less than traditional long-term-care insurance, but they cost a lot less, too. For instance, a short-term-care policy might pay for $1,050 of home care a week for up to 52 weeks and $200 per day of nursing home care for a year. Typical cost for a 65-year-old: about $125 a month, according to AALTCI.

Short-term-care policies have unisex pricing, which helps women, who typically pay more for coverage than men. Insurers that offer the policies also accept much older applicants, often up to age 85, and have simpler medical underwriting, making it easier for those with health concerns to qualify. "Because of this, they may be someone’s only available insurance option, and some coverage is better than none," Slome says.

But accessing these policies can be challenging. Several states, including California, Florida, Massachusetts and New York, have banned their sale, primarily because their duration and benefits are considered too limited compared with traditional long-term-care policies. In other states, few insurance agents are well versed in these policies because the market for them is small, Slome says.

Your state insurance commission or the AALTCI may be able to help with identifying options. Or you can contact insurers that offer this coverage, such as Aetna and Wellabe, to see if the policies are sold in your area.

Hybrid policies

The more common alternative to traditional care insurance is a hybrid policy that combines long-term-care coverage with life insurance or, less often, annuities. Unlike most conventional long-term-care insurance, which is use it or lose it, these policies offer a return on the money you’ve sunk into coverage even if you don’t end up needing help.

Life insurance with a long-term-care benefits rider, for instance, pays a death benefit to your heirs if you don’t access care. If you do, the payout is reduced or eliminated. The maximum monthly care benefit typically equals a percentage of the death benefit, usually 2% to 4%, paid out over a two- to four-year period.

"Hybrid life insurance policies with long-term-care riders address the psychological hurdle of paying for something that might never be used," Lord says.

Alternatively, you could purchase an income annuity with a provision that will increase your payout for a set period if you need long-term care. A $100,000 fixed annuity with such a rider might provide, say, $200,000 to $300,000 worth of care benefits for up to five years. If you don’t need care, the annuity continues paying as usual.

Hybrid policies can also be easier to qualify for than traditional long-term-care insurance because they have less-stringent medical qualifications, and the annuity version may be accessible to people up to age 80, Vanderzanden says.

The other big draw of hybrids: No premium surprises. With these policies, you typically pay one lump sum or a fixed annual amount spread over a set period rather than ongoing monthly premiums.

But their dual purpose and promised payout translate to higher premium costs than stand-alone policies charge. A 55-year-old male would pay a lump sum of about $53,000 for a hybrid life insurance policy with $180,000 in long-term-care benefits and a minimum death benefit of $120,000, according to the AALTCI.

While hybrid policies generally have the same claim eligibility and similar waiting periods as traditional policies, they tend to offer lower maximum daily or monthly care payouts than similarly priced traditional policies. They can also place more limits on the services or expenses that are covered, Slome says. In addition, they often provide smaller death benefits than traditional life insurance policies do or reduce an annuity’s standard payout.

They can be a good solution, though, if you may not qualify for traditional care insurance, are concerned about possible premium increases or dislike the idea of paying for a product you may never use.

Self-funding care coverage

Millions of Americans, especially higher earners and those over age 65, plan to pay for long-term-care themselves, should the need arise, rather than relying on insurance, KFF data shows.

The big question: Can you actually afford it?

Consulting firm Milliman estimates that the average 65-year-old would need to set aside $135,000 for future long-term-care needs, assuming an average annual investment return of 4.35%. CRR notes you should "increase that number if you live in a high-cost state, have a family history of dementia or other illnesses that may require a long period of assistance, or if you do not have family members who could help."

Personalizing that estimate to your circumstances is key. Start by researching the prices for different forms of care, such as a nonmedical caregiver or a room in a nursing home, in your local area (you can find a useful tool at carescout.com/cost-of-care). Assume those costs will rise by 3% to 5% a year until you hit your early to mid eighties, the most common time people begin needing paid care.

Next, consider your other resources. Do you have a healthy spouse, children who live nearby, close friends or other loved ones who would help out? asks Dick Weber, also of the Life Insurance Consumer Advocacy Center. Families typically provide at least half of all care hours, according to CRR.

Moving or tapping your home equity are also common contingency plans for managing long-term-care costs. "A lot of households think of their home as a kind of insurance, so that if something bad happens in retirement or they need a lot of care, they can use their equity,” says Anqi Chen, associate director of savings and household finance at CRR.

One thing to keep in mind about self-funding is that it is not very tax-efficient, Vanderzanden says. "You’re going to owe federal and, in most places, state tax on money you take out of retirement plans or when you sell stocks, property or other assets. So to get that one dollar of care you need, you’re going to burn through $1.50 or more."

In contrast, benefits from a long-term-care insurance policy aren’t generally taxed.

Government programs

Among those age 65 and older, 45% mistakenly believe Medicare will pay for their own or a loved one’s time in a nursing home, KFF found. This incorrect assumption is a big reason why people under prepare for this expense, says Chen.

In fact, Medicare will cover up to 100 days of care in a skilled nursing facility after hospitalization, and it may provide limited home health care, such as skilled nursing or therapy, if you’re homebound. But the program doesn’t generally pay for long-term-care services.

Medicaid, the government health insurance program for low-income families with few assets, does cover some long-term care. Six in 10 people with $100,000 or more in investments think spending down their savings to qualify is a viable backup option if they cannot afford long-term-care expenses on their own, CRR has found.

But eligibility is more challenging than many realize, and only 15% will actually end up accessing Medicaid for that purpose, CRR says. That’s because 70% of these households earn too much from Social Security and pensions to make the income cutoff. Although each state has its own rules, you typically wouldn’t be eligible in 2026 if your monthly income exceeds $2,982 and you have more than $2,000 in assets, excluding your home, a vehicle and personal belongings.

If you meet the criteria, state Medicaid administrators will review your financial history going back 60 months prior to your application to be sure you didn’t recently give away assets or sell them for less than fair market value to qualify. Should Medicaid find a prohibited transfer, a penalty period will be imposed and you won’t be eligible for benefits during that time.

Medicaid generally doesn’t cover room and board at an assisted-living facility, but it will typically pay for nursing and personal care services provided there, as well as for adult daycare and home health needs.

While nursing home care is usually covered, only certain facilities accept it, says Chad Karl, a CFP in Janesville, Wis., noting, "Many facilities are also already booked with Medicaid patients, which may require family members to look farther away for care."

Bottom line: "Medicaid should be the option you’re left with only if you have no other options," Weber says.

No matter what path you choose, once you’ve put a long-term-care plan in place, make sure to communicate it to your family and anyone else in your support network. That way, they’ll know what you want and how to access the insurance or assets you’ve set aside for the purpose, and they won’t stress about making related medical and financial decisions on your behalf without the benefit of your guidance.

Says Los Angeles CFP Joon Um, "The ultimate goal is to prevent long-term care from overwhelming your family."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Entering long-term care or a nursing home is quickly becoming a reality for many as they age. But as it becomes increasingly common, it's also becoming increasingly expensive.

Even with these staggering costs, long-term care planning is often overlooked, and many of these costs aren't usually covered under Medicare. Planning ahead should not be a small part of your retirement plan; it's an important way to ensure you can spend your golden years protecting your assets.

1. Contribute to an HSA

Contributing funds to a health savings account (HSA) is a powerful but often overlooked tool. The flexibility of these accounts is what makes them so valuable. People contribute to an HSA to offset current healthcare expenses, but the balance carries over each year, which means that money can also be invested for the future.

These accounts are a tax-advantaged savings vehicle that you can use at any age to pay for qualifying healthcare expenses. Your funds grow tax-free over time, and you can withdraw money tax-free for qualified expenses.

What are the qualified expenses you can use your HSA for, and what are the limitations?

Qualified HSA expenses:

• Long-term care insurance premiums
• In-home care services
• Nursing home or assisted living services
• Prescription medications
• Qualified services such as hospice
• Medical or mobility equipment

What isn't covered by HSA expenses:

• Room and board at a nursing home
• Services covered by insurance or Medicare
• Recreational activities such as golf, gardening or group exercise classes

2. Maximize Social Security

Making the most of your Social Security can be a strategic way to help cover long-term costs because it can create a larger income stream that you can rely on later in life.

One of the best ways to do this is by delaying when and how you take your Social Security. If you take it before you hit full retirement age (66 or 67, depending on the year you were born), your benefit is permanently reduced. If you can wait to claim, you'll increase your monthly benefit by 8% each year until you turn 70.

That higher paycheck each month can make a significant difference if you're faced with paying for long-term care in retirement. Unlike other investments you might have, Social Security is not impacted by the market, making it a much more stable income for covering future expenses.

A larger Social Security payment can help reduce the amount you need to withdraw from any other retirement or savings accounts you plan to rely on in retirement. This allows you to use those accounts for fun things you plan in retirement such as travel or hobbies.

While you shouldn't rely on Social Security benefits to cover the entire costs of long-term care expenses, maximizing them can help reduce the stress of paying for them out of pocket.

3. Explore long-term care insurance

If contributing to an HSA or using your Social Security benefits isn't the right strategy for you, long-term care insurance might be the next best thing.

It's crucial to understand how it works, as regular health insurance doesn't cover long-term care, and Medicare alone won't be enough. Explore your options to figure out whether a traditional or hybrid policy makes sense.

Traditional long-term care insurance policies typically come with annual premiums for life, while hybrid policies might allow you to draw down or accelerate the death benefit amount. Having long-term care insurance gives you more control over the type of care you receive, instead of being limited by how much you can spend out of pocket.

4. Start the conversation with family

Whether you're the one who will need it in the future or you have an aging parent who needs it soon, talking about long-term care or nursing home costs can be one of the most important conversations families can have.

Unfortunately, it's one of the biggest topics that many avoid. But if you wait too long, your family could face a lot of unnecessary headaches. Make sure the time is right. Find a calm, comfortable and private space to start talking and make sure you create a checklist of everything you want to cover.

If you're bringing this up for a family member who needs this care, make sure they know you're coming from a place of love, not judgment. It can be uncomfortable to bring it up, but it's a good idea to have those conversations before you're forced to by circumstance.

As Americans continue to live longer, the chances of needing long-term care is becoming more of a reality. Today's 65-year-olds have a 70% chance of needing long-term care in the future. While this is an important part of retirement planning, it can be overwhelming. Don't be afraid to ask for help. A financial adviser can sit down with you and determine which strategy for long-term care planning is right for you.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Let's say you and I were heading out for a walk. I mention that there's a 70% chance of rain. If you're like most people, you'd grab an umbrella. There might be a 30% chance that clouds hold off, but most people aren't willing to gamble.

Yet, when it comes to long-term care, many people do exactly that.

Roughly 70% of Americans age 65 and older will need some form of long-term care during their lifetimes. From a retirement-planning perspective, that's a clearly visible storm on the horizon, but far too many people walk into it without protection.

Long-term care is not a comfortable topic, but ignoring it might be the single biggest threat to an otherwise well-built retirement plan. I often tell clients that nothing punctures a retirement balloon faster than an unexpected care event.

One health issue, one extended need for help, and years of careful planning can unravel far more quickly than most people expect.

Not your grandmother's long-term care policy

As a financial adviser, I hear the same objections again and again. Many people remember the long-term care policies their parents or grandparents owned. They were expensive, unpredictable and, in some cases, disappointing. Many assume that little has changed since.

But it has.

I often say, "This is not your grandmother's long-term care policy anymore." The industry has evolved in meaningful ways, addressing many issues that gave older policies a bad reputation. Let's clear up a few of the most common misconceptions.

Myth No. 1: It costs too much

Cost is usually the first concern people raise. With traditional long-term care insurance, premiums were often adjustable, and many policyholders experienced significant increases later in life, exactly when they were least able to absorb them.

That unpredictability made planning difficult and left many families uneasy.

Today's long-term care solutions are structured very differently. Many modern strategies allow costs to be locked in upfront, sometimes even with a single premium.

That means no surprise increases later and no wondering whether coverage will remain affordable during retirement years.

Myth No. 2: It's 'use it or lose it'

Another hesitation I hear about frequently from clients is the fear of paying for something that might never be used. With traditional policies, if care didn't end up being needed, the premiums simply vanished, similar to unused auto or homeowners insurance.

Newer hybrid policies take a more flexible approach. If long-term care is needed, the benefits are there. If it's not, the policy can still provide value, often in the form of tax-free retirement income or a benefit for loved ones. Either way, the money put into the plan serves a purpose.

Myth No. 3: The coverage is not enough

Older policies also raised concerns about limited benefits. Lifetime coverage largely disappeared from the traditional market, and many plans capped benefits at levels that might not last through a prolonged care event.

Today's strategies are designed with more foresight. Some hybrid solutions offer lifetime coverage riders, while others are coordinated with a client's broader financial picture.

The goal is not to rely on a single source of funding but to create multiple layers of protection that work together if care is needed for longer than expected.

When I design long-term care strategies for clients, I focus on certainty. These plans are structured to pay out one way or another. If care is needed, benefits are there, often on a tax-advantaged basis.

If care is never required, the policy is not wasted. It can supplement retirement income or leave a legacy for the family. Because costs and benefits are typically defined upfront, there are no unpleasant surprises later.

Planning ahead is an act of love

Long-term care planning is not just about protecting assets; it's about protecting people.

I have seen this play out both professionally and personally. Like many families, we've had thoughtful conversations about what caring for one another might look like down the road and how planning ahead can preserve independence, dignity and choice for everyone involved.

Those conversations reinforced something I often see in my work. Having a plan in place is not about pessimism. It's about reducing stress, protecting relationships and making sure that loved ones aren't forced into difficult decisions during already emotional moments.

I hear similar comments from clients all the time. Some joke about never needing care. Others say they'll deal with it later.

But the reality is that we don't get to choose if or when help might be needed. Long-term care doesn't always mean a nursing home. It can include in-home care, assisted living or short-term rehabilitation after an injury or illness.

Staying in control

Planning ahead means staying in control. It means having choices. It allows you to receive quality care on your terms, without draining your savings or placing an unexpected burden on the people you love.

My goal is simple: I want clients to have an umbrella ready before the storm arrives. I hope they never need to use it, but if life brings a serious health event, they and their families will be grateful that protection is there.

Long-term care planning is now an essential part of a modern, holistic retirement plan. It's not about fear. It's about dignity, independence and the confidence that comes from knowing you're prepared for whatever lies ahead.

Ezra Byer contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

With the average American living 79 years, according to the Centers for Disease Control and Prevention, planning for the future is increasingly important. For women, whose life expectancy exceeds 80, it becomes even more critical.

A longer life expectancy means women are more likely to need long-term care than men. For women who do need care, the timeline is often longer. Research from the American Association for Long-Term Care Insurance shows that on average, women age 65 and older live with a disability for about 3.2 years, compared to 2.3 years for men.

If not properly planned for, that additional time can significantly impact assets and savings.

What causes the long-term care gap for women?

In many cases, women are navigating these situations alone. Because they tend to live longer, they're more likely to outlive a spouse, entering long-term care on their own. Without a spouse, or children available to provide that built-in support system, many women are forced to rely on paid care.

Whether it's bringing help into the home or transitioning to a facility, the cost and complexity of those decisions can increase significantly.

Financially, navigating long-term care can be especially difficult for women who are single, divorced or widowed. In a married household, there are typically multiple sources of income — two Social Security benefits and shared savings — and the ability to divide expenses.

The additional income can help offset the cost of care. For a single person, those same expenses must all be covered by one pool of assets.

Before requiring care of their own, many women spend years serving as a caregiver for others. Whether that's caring for a spouse, parent or a child, the role often comes with many personal and financial sacrifices.

In some situations, women may even have to reduce their hours or leave the workforce entirely, which can impact income, retirement contributions and future benefits. As time goes by, the decision to step away can leave women with fewer financial resources available should they need care themselves.

The difficult first step

In addition to the financial impacts, caregiving can also take a heavy emotional and physical toll, making long-term care planning even more important. However, despite these realities, it's a conversation that many families put off.

In my experience, people often assume that a spouse, child or another loved one will step in when the time comes. While that may feel like a safe assumption, it can lead to stress, confusion and even conflict among family members — especially without clear communication and a plan in place.

That is why it is so important to start talking about these decisions and making a plan.

Planning starts with having an open and honest conversation with family members and potential caregivers. Identify who may be involved in your long-term care and whether they'll be able to take on that responsibility. Having these conversations will help set expectations early.

Financial and medical plans

The next step involves taking a close look at your financial picture. Take inventory of retirement accounts, savings, insurance policies and Social Security benefits.

I encourage clients to run a financial 'stress test' to see how a long-term care scenario could impact their assets over time.

It's also critical to have the right legal documents in place, including powers of attorney and health care directives, to ensure decisions are being made by someone who understands your wishes and acts accordingly.

Missing these documents will likely complicate matters for loved ones during an already difficult time.

Your 50s are a good time to start

As for determining when to start long-term care planning, a good time to start is during your 50s. For many, this is the decade where retirement planning becomes a top priority. Starting early will give you more time to consider all options.

It can also make solutions like long-term care insurance more accessible and affordable. Waiting too long can limit options and make planning more difficult.

Long-term care planning isn't about expecting the worst. It's preparing for the realities that come with living a longer life.

For women, having a plan in place can make all the difference in maintaining independence and financial stability.

The more proactive you are with planning, the better positioned you'll be for whatever the future holds.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Are you worried about money? You're not alone. A recent survey by Intuit suggests that most Americans are anxious about their finances. But it's fair to say these worries can be even more pronounced for women.

Analysis from the Pew Research Center confirms that despite moves toward economic equality over the last few decades, women today are still paid less than men. And there are other unique hurdles that many women have to overcome.

Women live longer

More than 11,000 Baby Boomers are turning 65 every day, and about half of them are women. On average, women will outlive men by five years.

However, a recent survey revealed that only 70% of women say they have confidence in their retirement planning abilities.

If you're married and usually defer to your partner on financial matters, it's vital that you become familiar with your household's financial plan and make sure it meets your needs.

This plan has to support your longevity and give you confidence. If your partner has made a financial plan that you later find to be inadequate, it can spiral into a full-blown crisis.

Tax bracket changes for widows

A loved one's death is difficult for everyone, but becoming the surviving spouse can have significant financial implications, particularly for your taxes.

A grieving spouse can be hit with a sizable tax bomb because of a smaller standard deduction and being pushed into a lower tax bracket. This is commonly called the widow's penalty.

Your tax bracket determines the percentage of your income you will pay towards your taxes, all based on your earnings. Tax bracket limits are higher for married couples who file jointly than for single filers.

For example, if a married couple makes $50,000, that puts them in the 12% tax bracket. But a single person making that much would pay 22%.

A retired couple can have a very comfortable income from Social Security earnings and their retirement accounts, often landing them in the 12% bracket.

However, if one of them passes away, the surviving spouse usually doesn't have enough income to stay in that bracket.

If you are concerned about your tax situation after you or your spouse passes, there are things you can do now to help avoid paying the widow's penalty. One way to mitigate it is by converting your tax-deferred retirement accounts, such as 401(k)s or IRAs, to Roths.

When you convert these accounts, you will pay income taxes on their value, but after that, they are tax-free.

Roth retirement accounts don't have required minimum distributions (RMDs), which means if you don't need the money, you don't have to take it as income.

If you convert your accounts to Roths while you're still married and filing jointly, you will likely pay less in taxes now than you would potentially have to pay down the road if tax rates increase.

While these steps could be a great move for you, everyone's situation is different, so it is important to consult a trusted financial adviser to determine the best strategy.

Higher health care and long-term care costs

Because women typically live longer than men, their health care costs will be higher as well, and the numbers are alarming. Overall, women spend $15.4 billion more than men on out-of-pocket health care costs every year.

These higher costs are due to more than just extended life expectancy. They also have a lifetime of gynecological care, which can be very expensive, especially during childbearing years.

As women get older, the chances of them needing long-term care will also increase. Today's 65-year-olds have a 70% chance of needing long-term care in the future.

This is why I recommend looking into long-term care insurance, as this can help cover the costs of nursing home care and in-home health care, which aren't covered by Medicare.

It can also help families pay for chronic medical conditions, such as Alzheimer's.

A long-term care insurance policy can help alleviate some of the financial, emotional and physical burden of paying for your future medical needs. Planning for long-term care and medical expenses in retirement is often overlooked, but it's a critical component of any retirement plan.

What can women do now?

While the financial future for women can be daunting, there are things you can do to ease your worries.

Start with a budget and make sure that you have more money coming in than going out. If you find that is not the case, look at places you can cut back.

The income you have left over should be going to your emergency fund or retirement account.

One of the most powerful ways to boost your financial confidence and increase your financial success is to find mentors and resources to help boost your financial literacy.

Meet with a financial professional who can provide you with valuable knowledge and help create a customized plan that prioritizes your goals.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

A friend of mine in the insurance industry once told me, "We don't deal in probability. We deal in consequences."

That quote comes to mind when I think of the need so many people have for long-term care — and the financial consequences they face when they are unprepared to pay for it. They may need to drain their assets, take on debt or even call on the financial assistance of their children. None of these are a preferred option.

Unfortunately, many myths persist around long-term care. And when those myths lead people to misunderstand what long-term care is, how they can pay for it and whether they will need it at all, planning for it becomes even more difficult.

Let's cut through a few of the myths and get to the underlying truths.

Myth No. 1: Long-term care means a nursing home

In many cases, when people think of long-term care, the image that comes to mind is a nursing home. Indeed, about 1.2 million Americans are in such facilities.

But a nursing home is just one type of long-term care. Here are some other examples:

• Homemaker services assist older people with such tasks as meal planning, grocery shopping, transportation and other non-medical needs.
• A home health aide is a professional who monitors the health and well-being of individuals with disabilities or chronic illnesses, assisting them with daily living activities.
• Adult day health care provides older adults with physical or mental ailments an opportunity to socialize in a supervised setting.
• Assisted living facilities are for older people who need help with their daily care, but not as much as someone in a nursing home. Residents usually have their own apartment or rooms but share common areas.

Regardless of which type of care you are talking about, the nationwide average cost for those services can add up quickly, according to the Genworth-CareScout cost-of-care report.

In 2024, homemaker services cost an average of $75,504 annually. A home health aide averaged roughly the same amount, coming in at $77,796 per year.

Adult day health care was the least expensive, though still a bracing $26,004 annually, while an assisted living community was $70,800.

As you might imagine, a nursing home was the most expensive of all. A semi-private room in a nursing home cost an average of $111,324 annually in 2024, and a private room averaged $127,752.

As you examine those numbers, the obvious question arises: How do you pay for it?

People sometimes pay for long-term care using the government's Medicaid program, but there are serious drawbacks to doing so. The most significant drawback is that to be eligible for Medicaid, your income and assets must be below a certain amount.

If they are not, you can spend down those assets to get where you need to be, but under very specific rules.

Of course, in the process of spending the assets, you have nothing left to leave as a legacy to your loved ones, making this option one that is best avoided if at all possible.

Fortunately, other options exist, which takes us to another myth.

Myth No. 2: You need long-term care insurance

One way to pay for long-term care is with a long-term care insurance policy. These policies work like many insurance policies: You pay a monthly premium and, if you ever need long-term care, you put the policy into effect to pay for it.

But there are drawbacks to long-term care insurance, not the least of which is that it can be expensive. Also, long-term care insurance has just one use. If you never require long-term care, the money you paid all those years goes for naught.

For many years, long-term care insurance was touted as the best way to pay for care and avoid the damage the cost of it could do to someone's bank account. These days, though, you can consider alternatives that offer greater flexibility.

One of those alternatives is a life insurance policy that includes a long-term care rider. This allows you to avoid the all-or-nothing approach inherent with long-term care insurance.

Here's how it works: If, like so many people, you do require long-term care at some point, the life insurance policy lets you use part of your death benefit to pay for it.

Yes, that will reduce the amount of money your beneficiaries receive upon your death. But you avoid the crushing out-of-pocket expenses of long-term care, or worse, the need to spend down assets to qualify for Medicaid.

The real advantage, though, is that if you never need long-term care, the money doesn't disappear. The policy still functions like any other life insurance, providing your beneficiaries with a payment upon your death, so the premiums you paid over the years don't go to waste.

Another option is an annuity with a long-term care rider. Annuities can function like a personal pension, delivering income for life, while some are designed to limit exposure to market volatility.

When paired with a long-term care rider, they can also help offset the cost of extended care, integrating income planning, risk management and long-term care considerations.

And if, as in the case of the life insurance policy, you don't end up needing long-term care, the portion of the annuity money that was set aside to pay for it will go to your beneficiaries when you die.

Myth No. 3: The need for long-term care won't apply to me

All of us might like to think we somehow won't need long-term care, but statistics say the odds are roughly even that we will.

One government analysis reported that 56% of Americans who turn 65 will need some form of long-term care services or support at some point in the remaining years of their lives.

Many people understand this because their parents required long-term care, often at great expense that they hadn't prepared for, leading to depletion of assets and leaving them with nothing for their children or grandchildren.

In some cases, adult children are disappointed and frustrated that they can't afford a nice facility for their parents, which adds an extra emotional component to the financial strain.

Perhaps you will be one of the lucky people who don't require long-term care, but because of the expense involved, it's best to be prepared just in case. And even if you don't need the care, your spouse may.

A financial professional with experience in this area can help you understand the options and make a plan that works for you. Then, if the worst does happen, you will be in a better position to handle the expense — easing a lot of responsibility and anxiety from your family.

Ronnie Blair contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

In my hometown, everybody called it the "old folks' home." It's where my aunt worked long ago, and I used to tag along as a boy because I liked the people who lived there.

In the old folks' home, ageist as that term is, people had roommates and ate community meals and maybe joined a weekly bingo game for entertainment.

Oh, how times have changed.

Four decades later, I'm an adult, and shopping for a new place for my mom, 85, and my dad, 87, to live was a stark reminder of just how much housing for older people has changed. The old folks' home? Maybe it's still out there, but it's definitely not the norm.

The good news is, the marketplace has been transformed in a way that gives older people unprecedented choice over their style of living.

As a licensed nurse and CEO of a complete senior health company serving 5,500 people each day in their homes and in over 45 senior living communities, I know something about how senior living has improved over the years — and how to look for the best fit for you.

Modern options

With more Americans turning 65 now than at any time in history — more than 4 million per year, a total of 76 million people in the biggest generation of older people ever — the balance of power has shifted toward consumers, and older people are moving the market toward their wants.

After decades of transforming business, politics, music, education, arts and culture, Baby Boomers are changing the way America ages.

The biggest shift from the former days of the old folks' home is all the choices in modern senior living.

An AARP survey found that three of every four older people want to age in place at home, but professional home health care aides are increasingly hard to find, with agencies reporting major labor shortages that will grow to as many as 2.5 million unfilled jobs in the next decade.

Many older people, instead, are opting for community life. This route has developed the newest options that far surpass the former basics of the old folks' home.

Today, older people can move to:

• Age 55-plus communities for independent living with shared amenities
• Assisted living with staff that helps with bathing, dressing and eating
• Memory care for people with Alzheimer's and dementia
• Nursing homes with specialist nursing facilities and round-the-clock medical care
• Managed communities that allow people to live within all of the stages mentioned above as health changes over time

The key here is comparison shopping. It's crucial to visit prospective senior living options before you need them — the idea is to see if the community, culture and space feel right for you.

Though some liken the experience of shopping for senior communities to kicking the tires on a prospective car, I think it should be more like considering a college — you may be living there for years, and the experience can change your life.

Key items for your checklist

While the typical old folks' home of my youth had a one-size-fits-all approach to the people who lived there, modern communities should be able to reflect the Baby Boomer culture that values personal control for health choices.

Most older people have numerous doctors and specialists in several different medical offices. Scheduling and transportation can be daunting, so it pays to look for a senior community with professionals who work as a point person to coordinate health care.

Today there's much greater priority on daily wellness and prevention. Workout facilities have become standard for both exercise and rehab; many offer staff who are physical therapists, personal trainers and dieticians.

One of the biggest ways boomers have transformed American culture is at mealtime. Gone are the TV dinners and institutional fish sticks of Boomer youth.

Shopping for the right senior living experience means making sure the dining at any community can not only accommodate but celebrate healthy food choices and individual requirements for people who want vegetarian, gluten-free and other options.

Another important shopping point is to see how much personal risk each community allows you to take on. Sometimes adult children who serve as caregivers at home are more interested in safeguarding their parents than letting them take on the responsibilities and choices of daily life.

However, few older people want to live like a fragile egg in a protective cocoon. How important is it for you to keep your own schedule, or be outside daily or continue hobbies that may carry consequences, such as woodworking, swimming or pickleball? Check out the community ethic before committing to a new place to live.

Not too long ago, the old folks' home was designed and run to be a basic safety net. In our lifetimes, though, senior living has become more than just a place to go — it can be a place to grow.

The senior living market is big enough and diverse enough that you should be able to find the right fit for you. It pays to shop around.

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• Age Magnificently with the Help of a Geriatric Care Manager

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

U.S. retirees often become both givers and receivers of care and financial support. Usually, they are providers early in their retirement and end up as the recipients as they grow older and possibly outlive their retirement funds.

People don't often include these situations in their retirement planning. Understanding how retirees might find themselves giving or receiving help, and then figuring out how to prepare for it, can protect retirement security.

Providing care and support in retirement

A growing percentage of U.S. retirees care for family members. A 2025 AARP/National Alliance for Caregiving survey estimates 63 million Americans provide care for loved ones with serious health issues without pay.

Most of these caregivers are over 50, and about 22% are 65-plus. This unpaid care is typically for a spouse, sibling or parent with a chronic health condition, disability or functional limitation.

Grandparent caregiving is also becoming more common. About a third of the 6.7 million grandparents living with grandchildren are responsible for their care, according to the 2021 U.S. Census.

Additionally, retirees often help loved ones financially after a health event, job loss or divorce upsets their lives and causes financial stress. Many retirees also assist with college costs or special-needs care. And, as people live longer, they financially support their own aging parents when they outlive their savings.

Do retirees feel prepared?

The Society of Actuaries (SOA) Research Institute 2024 Retirement Risk Survey found that 84% of retired respondents felt ready for medical emergencies, while 87% felt ready for funerals and 59% for support during challenging times.

However, household income influenced the findings, and retirees who earned $100,000+ annually reported being prepared for supporting family members at much higher rates than their less affluent counterparts.

For example, while 66% of these respondents felt prepared to support their family during challenging times, 40% of those who made between $50,000 and $100,000, and only 30% of retirees who made less than $50,000, felt the same.

While planning for family support can help protect retirement security, the rates of retirees taking precautionary actions were uneven:

• About 40% said they have regular family discussions to plan for unexpected expenses
• 36% reported saving for unforeseen family needs
• 31% have used financial planning services to plan for these costs
• 24% have diversified investments
• 5% stated they pooled or combined assets with other family members

Generosity needs a plan

Retirees who are caregivers or financial supporters often find fulfillment in helping loved ones, but it can also be stressful. They may neglect their own health, and giving away too much money can endanger retirement funds.

Often, retirees find themselves providing care or financial support because of unplanned events that happen to their family. Because the impacts on retirement security can be profound, it's advisable to plan for these risks as much as possible.

The first step is for the retiree to talk with family members about their expectations. Part of that conversation should include backup plans in case the retiree becomes incapable of providing care.

It is also important for retirees to consider the feasibility of helping family members financially. For example, if a retiree wants to provide financial gifts to loved ones or pay for college, it should be done carefully to ensure the retiree can maintain financial stability throughout their retirement.

Additionally, it's advisable for retirees to have an emergency fund for the possibility of unexpected events that impact loved ones. They should also stress-test their plan before giving recurring help: Take into account market downturns, inflation and a long lifespan.

Expectations of care and financial support

As retirees age, they might need help with errands, appointments, medications and money management, or they might require simple companionship. This help most often comes from family. In fact, about 70% of people receiving family caregiving in the U.S. are 65 or older.

The 2024 Retirement Risk Survey found that 78% of U.S. retiree respondents expect strong or moderate levels of support from family or friends, with 58% saying they expect this support to come from their children, 28% from siblings and 18% from extended family members.

It's also not unusual for older family members to receive financial assistance from loved ones, especially adult children. Often, the need for support happens when the retiree loses a spouse, which can affect retirement income.

However, most retirees don't expect to need financial support from their family. Responses to the 2024 Retirement Risk Survey reveal the following:

• 49% expect no support
• 26% expect minimal support

Expectations vary by type of household:

• 30% of single retirees who live with family expect at least moderate financial support
• 20% of retired couples living with children expect the same
• 15% of single retirees living alone expect financial assistance from family members

The importance of planning ahead

While family is a major source of care for retirees, many people don't prepare for this circumstance, and when needs arise, it can disrupt loved ones' lives. Both physical care and financial support can put stress on a caregiver's job and finances, resulting in lost wages and Social Security benefits, and lower retirement savings.

Also, just as the stress of caregiving can affect retirees, it can also impact younger caregivers' physical and mental health.

Even before retirement, people should talk with family members to ensure they know where to find important financial and legal documents, such as power of attorney, advance directives and wills.

Retirees should also plan where they're going to live if they need assistance and who will be part of their support network.

Retiring couples should consider what happens to retirement income (e.g., Social Security survivor benefits and pensions) when one member dies. Surviving spouses and unmarried retirees should also take into consideration the aging of their support network.

For example, by the time a retiree needs care, the people they planned to rely on themselves might be incapable.

In short, it's important to have backup plans when it comes to care or financial support later in life.

For many Americans, family is central to retirement. Working with loved ones to identify roles, set boundaries and save for surprises can protect retirees' well-being and their nest egg, and give their loved ones peace of mind.

You may find the following retirement planning resources from the SOA Research Institute useful:

• Managing Post-Retirement Risks: Strategies for a Secure Retirement
• Understanding and Managing Post-Retirement Risks

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• How to Support Your Parents Without Derailing Your Finances
• You Could Live a Century. Here's How to Plan for Your Retirement
• What's the Key to a Secure Retirement?

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Many people spend decades saving and investing, only to discover that their well-funded portfolio doesn't necessarily equal a well-planned retirement.

To build lasting security, it's important to create a plan that can help you realize your goals while also protecting your income and independence. In the run-up to retirement, or when newly retired, you should therefore focus on these six key areas:

1. Taxes: Avoid the stealthy erosion of wealth

People are often surprised to learn they could end up in a higher tax bracket in retirement than while working. Income-based taxes on Social Security and Medicare and required minimum distributions (RMDs) that start in your 70s can push tax bills higher than you might expect.

The good news is that you may have more control over the taxes you pay in retirement than at any other time in your life.

If you've stashed a chunk of your money in tax-deferred accounts (a 401(k), 403(b) or traditional IRA, for example), you may want to look at the benefits of doing a Roth conversion now to minimize your tax burden later. You might also consider:

• Placing your investments in account types based on how they're taxed (called asset location)
• Using qualified charitable distributions to optimize the tax benefits of gifting and reduce your RMDs
• Applying income-timing techniques that can help smooth out taxable income over time

You may not be able to avoid taxes altogether, but with the right strategies, you can make them more predictable and ensure that more of your money continues to work for you.

2. Health care: Preparing for retirement's most underestimated expense

According to Fidelity Investments' most recent Retiree Health Care Cost Estimate, a 65-year-old retiring in 2025 can expect to spend an average of $172,500 on health care and medical expenses throughout their retirement — and those costs can rise sharply if long-term care is required.

Building health care into your financial plan, rather than treating it as an afterthought, can make a dramatic difference in how much you'll spend.

That means reviewing your Medicare options annually to make sure you still have the best plan for your needs. (If you're still working, you may want to consider investing in a health savings account.)

The sooner you explore the options for long-term care coverage, the more confident you can be that you'll be protected from what could be one of the largest expenses you'll encounter in retirement.

3. Risk in the market: Safeguarding what you've built

The stock market doesn't care that you've just retired and that you're depending on your nest egg to last for decades.

Experiencing a downturn early in retirement, while you're taking money out of your accounts but no longer putting money in, can drain your portfolio much faster than you expected.

One way to guard against this phenomenon, known as sequence of returns risk, is to separate your assets into three separate "buckets":

• Safe reserves for near-term income
• Balanced holdings for the next phase
• Growth assets for later years

The goal of a bucket strategy isn't to completely eliminate risk but to position it so that it serves you, and not the other way around.

4. Income: Turning savings and benefits into a reliable paycheck

After years of diligently accumulating money, many retirees struggle to come up with a withdrawal strategy that works for their needs. Withdraw too much, and you risk running short in the future. Take too little, and you may not enjoy the lifestyle you worked so hard to earn.

A plan that thoughtfully blends multiple income sources — Social Security, pensions, dividend and annuity payments, and systematic withdrawals — can create a steady paycheck that remains reliable even when markets fluctuate.

5. Vitality: Extending your health span, not just your lifespan

Money is a means to sustain your active and fulfilling retirement, not a scoreboard to measure it against.

Studies consistently show that physical activity, purpose and social connection can improve quality of life and extend longevity.

Your financial plan should support the habits and hobbies that keep you energized, including travel, time with family and friends, continued learning and/or volunteering and giving back to your community.

6. Estate and legacy: Living fully and making your wishes known

A legacy plan is about more than the distribution of your assets when you're gone. It's about ensuring your loved ones know and understand your wishes, have access to up-to-date and professionally prepared legal documents, and can navigate decisions without confusion or conflict.

Don't delay. It's important to keep your beneficiary designations current, establish powers of attorney and communicate your wishes to your financial adviser and those you care about.

Coordination is key

It's often the blind spots that cause the most problems — and the most regret — for retirees.

In truth, many hard-working retirees don't have a money problem; they have a coordination problem. They've accumulated various assets over the years, but they have no idea how, or if, those investments will work together.

It's like trying to assemble a 1,000-piece jigsaw puzzle without looking at the picture on the front of the box.

That's how retirement feels for many people — scattered, uncertain and more complex than it needs to be.

When you have a plan in place to cover the six foundational areas — taxes, health care, risk, income, vitality, and estate and legacy (or THRIVE) — your wealth can transform from a collection of accounts into a framework for living well.

And with the help of a financial adviser, preferably someone who is a retirement specialist, you can feel more confident that you're prepared for the exciting time ahead.

Kim Franke-Folstad contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

We often look forward to retirement as a time to kick back, travel more or otherwise revel in our golden years.

But smooth sailing is no guarantee in retirement, especially if you don't understand where the risks lie and make plans to avoid them.

Here are seven risks that could sink, or at least heavily damage, your retirement, along with strategies to avoid them.

1. Longevity risk

Longevity would, in most instances, seem like a positive thing. But the longer you live, the more likely you are to run out of money. When planning, consider the possibility that your retirement could last two or three decades — or longer.

This means you need a guaranteed monthly income that will cover all of your expenses and last for the rest of your life. That income could include Social Security, a pension or other income sources that you can't outlive.

One strategy that can increase your monthly income stream is to purchase a deferred annuity, such as a fixed-index annuity, and add a lifetime income rider to it. A deferred annuity allows your money to grow tax-deferred until you start withdrawing from it.

When you are ready to begin withdrawing money from the annuity, you activate the income rider, and you will receive a monthly payment for life, even if your account value drops to zero.

2. Market risk

When you're young, a market downturn usually isn't necessarily worrisome because you have years to recover.

Historically, the market has always rebounded, so you can wait it out. As you near or reach retirement, though, that's no longer the case.

The worst scenario is a market drop occurring at the same time as you withdraw money from your investments to live on. Your portfolio balance can plummet quickly.

People often try to combat this risk by moving a percentage of their money from the stock market into less aggressive investments.

But that comes with its own risks. If you become too conservative, your investment's growth may not keep up with inflation.

Again, this is where a carefully planned income stream can help.

3. Sequence of returns risk

It may surprise you to learn that retirements can be unequal even if retirees have the same amount of retirement savings and the same return on their investment over time.

The reason for that is sequence of returns risk. Put simply, people who experience a down market early in retirement and a positive market later fare worse than those who experience the opposite.

A hypothetical scenario illustrates why. Two men, John and Bob, both retire with $100,000 in personal savings. Both retirees will withdraw $5,000 a year to supplement their other retirement income, and both will live another 25 years. Both men enjoy a 6.8% average annual rate of return on their investments.

However, while Bob sees his $100,000 grow over the 25 years, John sees a significantly different result. He runs out of money in year 19.

The difference is that John's worst years came at the beginning of retirement. His portfolio suffered losses that, ultimately, he could not recover from. Bob's best years were during the early years of his retirement, helping his portfolio grow and giving him more of a cushion for when the down years arrived.

One way to manage sequence of returns risk is to hold your personal investments in a diversified portfolio with a broad range of asset types and classes. Another strategy is to maximize your guaranteed income sources, which allows you to reduce your reliance on personal savings and investments.

4. Tax risk

Many retirees saved for retirement by contributing to tax-deferred accounts, such as traditional IRAs or 401(k) accounts. A downside of these accounts is that when you retire and begin withdrawing the money to live on, your withdrawals are taxed as ordinary income.

In addition, once you reach the age of 73 (75 for those born in 1960 or later), required minimum distributions (RMDs) kick in. Those RMDs force you to withdraw a certain percentage from your tax-deferred accounts each year.

A popular strategy for reducing some of your tax risk is to convert tax-deferred accounts to Roth accounts. You pay taxes when you make the conversion, but the money in the Roth account grows tax-free, and you don't pay taxes when you make withdrawals.

5. Interest rate risk

Although debt is an obvious way in which people are affected by interest rates, a retiree doesn't need to be in debt for interest rates to be problematic.

Many retirees have money in bonds, and interest rates directly affect these, sometimes for the better and sometimes for the worse. When interest rates rise, bond values fall. When interest rates fall, bond values rise.

Diversifying your investments with a mix of stocks, bonds and other assets is one way to mitigate interest rate risk.

6. Inflation risk

Inflation can be catastrophic to retirees on a fixed income.

Although Social Security has an annual cost-of-living increase, this can be canceled out by increases in health insurance costs, including Medicare.

To combat inflation, retirees might want to revisit how their money is invested. Stocks have the potential to provide greater investment returns that could outpace inflation, but they are also riskier than some other investments, so you still want to carefully weigh what percentage of your portfolio goes to stocks.

You might also be able to grow your income with a fixed-index annuity with an increasing income rider or ladder multiple income annuity products.

7. Long-term care risk

Few people nearing retirement want to focus on the fact that they may eventually need expensive long-term care, but that's the reality.

Someone who turns 65 today has about a 70% chance of requiring some type of long-term care during their remaining years. Such care is not cheap.

The projected monthly cost of a semiprivate room in a nursing home in 2026 is $9,842, according to the annual CareScout and Genworth Cost of Care Survey. An assisted living facility is $6,259 a month.

Several options exist for handling this risk, including having a traditional long-term care insurance policy, a life insurance policy with a long-term care rider or personal savings.

Putting a plan in place

Preparing for these retirement risks can be the difference between a relaxing and enjoyable retirement and one that causes constant anxiety. While there is no guarantee these risks will be eliminated, you can take steps to mitigate some of the pain they cause.

As you can see, there's a lot to digest here. A financial professional can help you understand how much each risk might affect your retirement and help you create a game plan to prepare for them.

That way, once your working years are behind you, you can focus on more of the things that make retirement worthwhile.

Ronnie Blair contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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• You Don't Want It, But You Should Plan for It Anyway: An Expert Guide to Long-Term Care
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• The 'Sequence of Returns' Risk Could Shrink Your Retirement Nest Egg
• Your 401(k) Can Now Include Alternative Assets, But Should It? A Financial Adviser Weighs In

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Preparing for retirement isn't just about accumulating money; it's about helping make sure every aspect of your financial life is ready for that next chapter. Does your retirement plan cover all the bases?

The acronym IDEAL is a helpful way to remember the five key areas of retirement planning that, together, create a comprehensive plan:

• Income
• Distribution strategy
• Expenses
• Assets
• Legacy

Many people focus heavily on investments or assume that if they've saved enough, retirement will take care of itself.

In reality, an IDEAL plan addresses how you'll generate income, manage taxes and withdrawals, handle big expenses such as health care, allocate your assets and leave a legacy.

Here's a closer look at why each of the five pillars of an IDEAL retirement plan is important for your golden years.

Income

Income planning is the foundation of a comfortable retirement. After decades of receiving a regular paycheck, retirees must create a paycheck from various sources.

If this is where you're at, start by evaluating your guaranteed income streams, such as Social Security benefits and any pensions or annuities.

When should you claim Social Security to help maximize your benefit? Many retirees benefit from delaying Social Security to increase their monthly checks, but claiming early might make sense in some situations.

If you're lucky enough to have a pension, consider whether you'll take it as a lump sum or an annuity and whether there are survivor benefits for your spouse.

Next, determine how much additional income you'll need from your savings each month to cover expenses.

This is where your 401(k)s, IRAs and other investments come into play. A popular guideline is the 4% rule, which suggests withdrawing about 4% of your portfolio in the first year of retirement and adjusting for inflation thereafter.

The key is to design a withdrawal strategy that provides enough cash flow to cover your needs and some wants without running your nest egg dry too soon.

This might involve setting up systematic withdrawals, building a cash reserve for the first few years of retirement or using an annuity to cover essential expenses.

Clear income planning means you enter retirement with a clear answer to the question, "Where is my money going to come from each month?"

Distribution

Planning retirement income isn't just about how much you withdraw. It's also about the order and timing, and a thoughtful distribution strategy can help minimize taxes across your retirement years.

Many retirees start with taxable accounts to take advantage of lower capital gains rates, then move to tax-deferred accounts such as IRAs and 401(k)s before required minimum distributions (RMDs) force larger withdrawals.

Roth conversions can also play a role, in which you pay some tax now to help secure tax-free income later and potentially reduce future RMDs.

It's also important to factor in state taxes, relocation plans and penalties for early withdrawals before the age of 59½. By coordinating withdrawals carefully, you can potentially save a substantial amount in taxes and keep more of your income working for you.

Expenses

Retirement budgeting isn't just about travel and hobbies; it must also account for big expenses, especially health care. Medical costs typically increase with age and outpace inflation, so understanding Medicare is key.

At 65, you'll pay premiums for Part B, possibly Part D, and you might need a Medigap or Medicare Advantage plan.

Higher earners should also factor in IRMAA surcharges. Beyond routine care, nearly 70% of retirees will need long-term care, which Medicare doesn't cover.

Options include long-term care insurance, hybrid life insurance or earmarking savings. Don't forget irregular costs, including home and car repairs and family support.

Building a budget that separates essentials from discretionary spending helps ensure your retirement isn't derailed by unexpected expenses.

Assets

Managing your investments doesn't end at retirement — it simply shifts focus. The goal is to balance growth with preservation, keeping pace with inflation while helping protect against big losses that hurt when you're withdrawing funds.

Some retirees might adjust to a more conservative allocation, such as 50% to 60% in stocks and the rest in bonds and cash, although the right mix depends on income sources, risk tolerance and life expectancy.

Diversification across assets and sectors helps cushion volatility, and keeping a cash reserve for one to two years' worth of expenses can prevent selling at a loss during downturns.

Regular rebalancing helps keep your portfolio aligned with goals, and income-producing assets such as dividends, bonds or REITs (real estate investment trusts) can help provide steady cash flow — although it's wise to avoid chasing risky yields.

Don't forget to plan for RMDs, ensuring those funds are held in liquid, stable investments. With steady oversight, your portfolio can help support you through decades of retirement.

Legacy

An ideal retirement plan also contains your legacy, which includes what happens to your assets after you're gone. Estate planning isn't just for the wealthy; it's essential for anyone who has family, property or savings.

At least have a will, power of attorney, and health care directives in place, and keep beneficiary designations current on retirement accounts and insurance.

Depending on your situation, a trust can help avoid probate and provide more control of asset distribution. Larger estates might require tax strategies, while some people might simply want to support their family or charities or pass on a business.

Communication is equally important: Talking with heirs and ensuring your executor knows where to find key documents prevent confusion later.

Legacy planning can help provide peace of mind by ensuring your wishes are carried out and you care for your loved ones

Retirement planning can seem overwhelming, but breaking it down into these five IDEAL categories can help make it more manageable.

By reviewing Income, Distribution Strategy, Expenses, Assets and Legacy, you can spot areas that need attention.

Perhaps you realize that you need to tweak your investment mix, start planning for long-term care or update an old will.

Addressing these now, rather than later, will help ensure your retirement truly lives up to your dreams and is as ideal as possible.

Ezra Byer contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The holidays give many families a rare chance to gather in one place, sharing meals, stories and traditions. But amidst the festivities, there is also a unique opportunity to have conversations about the future.

Even a small step now — sharing your thoughts on aging, care or estate plans — could help prevent confusion, conflict or stress down the road.

Many people find these conversations challenging, and understandably so. They touch on mortality, money and independence.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Yet, in my experience with clients, the greatest gift you can give isn't always measured in dollars; it's the clarity and peace of mind that come from a well-communicated plan.

Whether you are the matriarch or patriarch of the family, or the adult child looking to support aging parents, here is how to approach these conversations this season.

For the older generation: Stewardship and clarity

If you are the one who built or stewarded the family's wealth, you are likely focused on two main objectives: maintaining your own comfort and easing future responsibilities for your children. Clear communication supports both.

Long-term care and living wills

Talking about long-term care doesn't have to be a technical discussion about insurance policies. It can be as simple as expressing a wish: "I want to make sure my health care preferences are clear if I can't speak for myself."

From there, you can share whether you would prefer to age at home or elsewhere and confirm that your power of attorney and health directive documents are current. This isn't about giving rigid instructions — it's about ensuring your family isn't left guessing during a crisis.

Estate plans and legacy

A smooth, organized transition is one of the most meaningful legacies you can leave. You don't need to get into specific dollar figures at the dinner table. Instead, focus on the logistics:

• Where are the key documents kept?
• Who are your attorney, tax professional and wealth manager?
• What is the general structure of the plan?

If your plan involves unequal distributions, offering brief context now can spare significant tension later.

Family values and philanthropy

If discussing assets feels too heavy, try starting with values. Bringing your family into your charitable giving can be a gentle way to discuss legacy. Asking which causes matter to them turns the conversation toward shared purpose rather than inheritance.

For adult children: Curiosity and respect

Adult children often want to support their parents but fear overstepping boundaries. The key is approaching these topics with curiosity and respect, rather than demands.

Asking about preparedness

You would feel better knowing where your parents' key documents are and who to contact if something happens. Frame the question practically, not intrusively.

Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.

Understand what key professionals are involved — the attorney, wealth manager, accountant and anyone else supporting the family. Identifying these individuals is not only part of maintaining an "orderly estate," but it also helps reduce the risk of miscommunication.

Crucially, it can help prevent your parents from becoming victims of financial fraud and hacking by ensuring there is a trusted team watching over their affairs.

Understanding the care plan

If your parents have said they want to age in place, it helps to ask what that means in practice. How do they imagine the family coordinating support?

Discussing this now keeps everyone aligned and avoids accidental misunderstandings later.

Aligning on educational support

Holidays can also be a good time to talk about help for the grandchildren's education. Asking whether they would like to contribute to 529 plans — or use another approach — keeps things coordinated and tax-efficient.

Conversation starters

If you aren't sure how to break the ice, try one of these openers.

Parents could say:

• "We're not getting any younger, and I want to make sure we're on the same page about elder care. We'd like you to be the point person for our care when we're older. Is that something you'd be open to?"
• "At some point next year, I'd like you to sit down with our wealth manager and attorney to understand what to expect when I'm gone. Can we get something on the calendar?"

Adult children could say:

• "I'm not sure how to think about planning for the children's education. Is that something you'd be willing to contribute to during your lifetime instead of leaving it up to the will?"
• "If you got hit by a bus tomorrow, where is everything saved? Do you have a doomsday file on your computer?"

Putting it all together

Not every topic will be resolved over a single holiday dinner — and that's okay. The goal is simply to begin.

By opening the door to these conversations, your family can create a shared commitment to clarity, stability and long-term well-being. That is a gift that lasts far beyond the holiday season.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

If you’re among the nearly one in four Americans who are providing financial support to an aging parent, chances are you’re feeling the squeeze — emotionally as well as financially.

That’s the conclusion of two recent surveys, which found that the cost of lending parents a hand is making it tough for many adult children to reach their own money goals and leaves some of them feeling conflicted about the help they’re giving.

About three-fourths of those helping out parents, a partner’s parents or both with expenses such as groceries, housing and medical bills said that doing so prevents them from paying off debt, building an emergency fund and achieving other key financial goals, according to a survey this summer from LendingTree, an online lending marketplace.

In addition, 38% of the respondents providing support or who expect to in the future said that either they or someone in their family had to quit a job or reduce work hours because of their caregiving responsibilities.

“In my family, my wife has had to dial back some of her hours to help her father,” says Matt Schulz, LendingTree’s chief consumer finance analyst. When you find yourself helping your parents, Schulz says, “it just takes a huge toll, both financially and emotionally.”

The pinch can be especially painful for those who are helping aging parents while raising children, according to a September survey from Allianz Life, a financial services provider.

In the survey, roughly six in 10 of the caregivers with children younger than age 18 said they had reduced or stopped contributing to their retirement plans as a result of the assistance they’re providing.

That could backfire. “Stopping contributions to your retirement can magnify problems for your kids [when they grow up] because they may then need to help you in the future,” says Kelly LaVigne, vice president of consumer insights at Allianz Life.

Adult children who are helping their parents, or plan to, are of two minds about it, LendingTree learned. Eighty-four percent believe providing financial support is their responsibility, but nearly half admitted feeling resentment about the financial burden.

“This shows the tug-of-war going on,” Schulz says. “When you’re in the trenches managing an elderly parent, there’s a side of you that is grateful you have the opportunity and financial wherewithal, but there’s also the side that’s like, 'Man, this is really hard, and I wish I weren’t in this position.'”

If caring for a parent is putting a strain on your finances, experts suggest taking these steps:

Get a grip on debt. Nearly six in 10 adult children helping aging parents have gone into debt as a result, LendingTree found. More than half borrowed at least $5,000; 13% have taken on $25,000 or more in debt.

It’s imperative to whittle down your debt, especially if you borrowed via a credit card (average rate: 22%), experts say. A smart first step: Ask your issuer for a lower rate — a strategy that LendingTree found is successful 83% of the time.

Let others help. Talk to your siblings to see whether they can chip in. It’s also a good idea to talk with a financial adviser. Even a one-time session with a fee-only planner can help you review spending, manage debt and identify sources of additional funds for caregiving costs. Find one at NAPFA.org.

Tap community resources. The National Council on Aging’s free online Benefits Checkup tool lets you type in a ZIP code to find local programs that could help your parents (or you) better afford food, housing, health care and more.

If you’re not helping out parents now but think you might need to provide assistance in the future, talk with them about their financial situation soon.

Says Schulz, “It’s not an easy thing to do, but it’s so important, because the more you know, the better able you are to start thinking through what you may need to do going forward.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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The nightmare scenario for many people growing older on their own — a medical crisis in the middle of the night — happened to Jackson Rainer over the summer. Nagging stomach pain turned so excruciating that he couldn’t wait for an ambulance to get to his high-rise apartment in Atlanta. So he drove himself to the hospital and was immediately admitted. Three days later, his colon ruptured, necessitating surgery to remove his large intestine.

Rainer, 70, faces months of recovery and adjustment to a new diet and lifestyle. Yet the semiretired clinical psychologist, whose wife of 38 years died in 2016, says, "I am just as fortunate as I can be."

What Rainer, who doesn’t have children, feels grateful about is his circle of close friends, who sprang into action as news of his illness spread. They secured his apartment and his second home in Tryon, N.C., paid his bills, made medical decisions on his behalf when he could not, and remained by his bedside during his three-week hospital stay. Once home, they did his grocery shopping, bought clothes to accommodate his 40-pound weight loss, and planned future activities, such as visiting museums, that wouldn’t involve eating. As his strength and ability have returned, he says, they’ve gradually and graciously started returning the reins of his life back to him.

"Not one of these people shares my DNA, but they have been right here with me," Rainer says. "As a solo ager, you learn to be self-reliant, but it’s also critical to make an effort to create a community that is supportive. I’m humbled every day by mine."

Like Rainer, an estimated 15 million Americans aged 55 and up are growing older on their own, without a spouse or children they can count on for support, according to the U.S. Census Bureau. When you include people who live alone and are estranged from their kids or can’t depend on them or other close relatives as they age, the numbers swell to about one-third of people 50 and older, AARP reports. And millions more who are married without children will be on their own one day when their spouse dies.

Planning for retirement when you’re on your own is in many ways like the planning you would do in any other situation. You need to manage your money so you can cover your expenses over your lifetime and arrange what happens to your remaining assets after you die. You have to sort out where you’ll live and how you’ll manage if your health falters.

What’s different for solo agers is not the tasks themselves but rather some of the solutions and the urgency with which you need to put them in place, experts say.

"Intentionality is key when it comes to your money, your health care, and your quality of life, because as a solo ager, there is no one to manage these things for you but you," says Ailene Gerhardt, a certified senior adviser and founder of Navigating Solo, a resource clearinghouse for people growing older on their own.

Here’s what experts and solo agers who have planned ahead suggest.

Find your 'peeps'

Many solo agers are content living alone as they age, prizing their independence and freedom, according to a 2023 AARP study. But they also express more concern than other older adults about who will step up if they need help and whether their wishes regarding their health, money and home will be honored — or even understood.

"The number one question on the minds of people growing older alone, especially those who have experience caring for parents or other relatives themselves, is, 'Who will do this for me?'" says Joy Loverde, author of "Who Will Take Care of Me When I’m Old?"

At a minimum, you need to formally identify a primary contact and one or two backups you trust to make health care and financial decisions on your behalf if you become incapacitated. Solo agers commonly pick siblings for these roles — a less-than-ideal choice, experts say, if the brother or sister is close to your age and so will face similar challenges when it comes to growing older.

"Look first to your extended family to see if there is someone a generation younger who might be suitable — maybe a niece, nephew or younger cousin," says solo aging expert Sara Zeff Geber, author of "Essential Retirement Planning for Solo Agers." Whoever you pick, Geber adds, make sure you talk with them first to check that they’re comfortable assuming the role.

You also need people you can rely on for day-to-day tasks that come up — someone who can bring you groceries if you’re laid up, feed the cat if you have to stay in the hospital for a few days, be a second set of ears at a doctor’s appointment if you have a worrisome diagnosis. Building those relationships now is key, whether through faith-based groups, book clubs, senior centers or making an effort to know your neighbors. The goal is to make these connections before you’re in crisis mode, not just because you’ll need help then but also for companionship now, to stave off the loneliness that many solo agers say they feel.

Lawrence Weiss, CEO of the Center for Healthy Aging in Reno, Nev., knows that well, from a personal and professional standpoint. Single now with no kids after two divorces and the end of a third long-term relationship, Weiss, 78, relied on his exes, with whom he’s still friends, for help recently after he injured his head in a fall. Now he’s trying to expand his circle through Connections Central, an organization that hosts regular meet-ups of small groups for coffee and conversation, to develop deeper relationships.

It’s a path that Jack Rainer has been following for years, building what he terms his FAR Circle, short for Friends and Relatives. Mostly, though, he just calls them his “peeps” — a group of people who have pledged to be there for each other, whenever they need help and whatever kind of support is warranted.

“As a psychologist, I’ve learned that men in particular need to learn to be the one to take the first step, do the inviting, put the energy into building relationships,” Rainer says. His advice? “Reach out, be generous, find your altruism and give of yourself.”

Document your wishes

Once you’ve identified people for key roles, give them the legal authority to act on your behalf, if needed.

That means putting in place key estate planning documents such as a health care proxy and durable power of attorney, which allow people you designate to make medical and financial decisions for you, and an advance directive that spells out your wishes regarding medical treatment. Also important: a HIPAA release allowing health care providers to share your medical information and a will or trust to direct the disbursement of your assets after you die.

“A traditional estate plan with these legal documents is a solo ager’s first line of defense, to ensure what they want to happen to them is what actually happens,” says certified financial planner Rob Lyman, president of Johnson Lyman Wealth Advisors in Los Altos, Calif.

Lyman also recommends writing a personal letter of instruction that lays out details such as the location of key documents, financial account numbers and log-in information, how you want pets and plants cared for, and health information that’s important for your designees to know. “It’s not legally binding, but it makes it much easier for the people you’ve entrusted to carry out your wishes,” Lyman says.

Yet, despite the importance of drawing up estate planning documents such as a will, trust or advance directive, only four in 10 solo agers have done so, according to AARP.

Count Karin Edelson, 61, among them. Divorced with no children, the recently retired middle school English teacher from Royal Oak, Mich., is currently sharing care for her mother, who has Alzheimer’s, with her brother. “We’re on our second parent with Alzheimer’s, which worries me greatly about what the future looks like for me,” says Edelson. “As a single person with no kids, I don’t want to leave anything to chance.”

Toward that end, Edelson has drawn up a will and trust, advance directives, and a health care proxy and power of attorney, naming her sister, brother-in-law and adult nieces to the necessary roles. She has also written a detailed letter of instruction, down to who gets her Cartier watch and her desire to be taken to Switzerland, where death by lethal injection is legal, if she develops dementia — and she has talked to her nieces to make sure they think they could carry out her wishes, if called upon.

“I hope I’ve left a very easy path for everybody,” says Edelson. “I don’t want to put the burden of decision-making on anybody else.”

Explore housing options

Six out of 10 solo agers worry that they won’t be able to stay in their homes as they get older, according to AARP. Most have not even considered other arrangements, such as a senior living community, that could provide more support if needed.

That could be a mistake, Geber says. “People often believe aging in place is easier and cheaper than other living arrangements, but that’s often not the case,” she says, when you consider the cost of services you may need as you get older, from snow removal and yard maintenance to home health care if you develop a chronic illness.

Adds Loverde, “Your choice of housing has everything to do with creating a support system as you age. A living environment that includes other people, known as a community setting, can solve a multitude of challenges for solo agers.”

For Ellen Fair, 72, the decision to move to a life-plan community in Sleepy Hollow, N.Y., which provides assisted living, skilled nursing and memory care on-site if needed, was a no-brainer. Her mother had a catastrophic stroke at 74, and Fair and her sister spent years caring for their stepmother as her health failed until she died in 2023. “I’m keenly aware that where the need for late-life care is concerned, it’s not a matter of if, but when,” says Fair, a former managing editor for various magazines who currently lives in New York City.

A bequest from her stepmother is making the move possible. Fair signed the contract in August for a two-bedroom apartment, plunking down nearly $1 million in entrance fees, which include coverage of lifetime care as needed; she’ll also pay a monthly fee of about $8,000, which includes access to amenities such as dining services, a pool, fitness center, educational programs, a community garden and housekeeping.

“It’s eye-poppingly expensive,” says Fair. “But if I’d had the money, I’d have moved sooner. It’s a weight lifted to know everything is taken care of.”

Life-plan or continuing care retirement communities like the one Fair chose are typically the most comprehensive and costliest housing arrangement. Another community setting that might appeal: the Village to Village Network (vtvnetwork.org), a membership organization in neighborhoods across the country in which older residents live independently but have access to volunteer-provided services such as transportation, technology support, social events, and help with light repairs.

You could also look into naturally occurring retirement communities (NORCs), which are apartment buildings or housing complexes that organically, rather than by design, have many older residents; neighbors often help each other out, and many NORCs have programs and services for seniors. Other options include 55-plus communities, shared housing (à la The Golden Girls), and co-housing communities, in which residents live in private homes but share common spaces and management, to foster neighborly support and interaction.

Know what you can afford

Without child care, orthodontia and tuition bills to pay, many solo agers are better off financially when they reach retirement than parents are. A Pew study last year found that among adults age 50 and older, those without children had a net worth 20% higher than parents of the same age — and bigger retirement accounts as well.

For other people growing older alone, though, getting by on one income instead of two and shouldering household expenses on their own is tough.

“What we’ve found is a deep split among solo agers, between people who have done very well with their finances and others who struggle to make ends meet,” says CFP Jay Zigmont, CEO of advisory firm Childfree Wealth, in Mount Juliet, Tenn., and founder of Childfree Trust, an estate-planning and fiduciary service.

To get a firm handle on where you fall on the spectrum, consider meeting with a financial adviser, if you don’t already work with one, to review your income and assets so you can better understand what you can comfortably afford.

Sandi Kane, 74, a retired team-development manager in the tech industry, suggests having the adviser model scenarios based on options you are considering — say, if you’re weighing a move to a life-plan community or to a 55-plus community. “This information gives additional peace of mind as you consider the future and will help inform your decision,” says Kane, who has been divorced twice and doesn’t have children.

Without the safety net of a second income stream from a spouse’s Social Security benefits, pension and retirement portfolio, you want to spend cautiously. But since you may not care about leaving an inheritance for anyone, you don’t want to be overly frugal either.

Karin Edelson, the retired English teacher, has tried to straddle the line between the two. “I’ve always been very careful with money — almost neurotically careful,” she says. “I don’t buy things I can’t afford. I saved as much as I could while I was working. I invested well and have a good amount put away.”

Edelson also started a sideline tutoring business that she still maintains, using that income to pay for travel, so she doesn’t dip into retirement savings. “Financially, I don’t worry at all,” she says.

Let the pros help

You may be living alone as you age, but you don’t have to go it alone. An army of professionals are waiting in the wings to lend a hand.

Struggling to identify someone to be your health care proxy and power of attorney? A professional fiduciary may be able to fill that void. Currently, Arizona and California are the only states that license and regulate professional fiduciaries, but you may be able to replicate some of their services. Zigmont’s Childfree Trust, for example, works with bank trust departments to provide next-of-kin services nationally. If you have sizable assets, a bank trust department may provide this service.

Four in 10 solo agers worry about needing help with everyday money management. A daily money manager can assist with bill paying, budgeting, organizing tax documents and other routine financial tasks; some also provide fiduciary services (see the box below for more info on these and other helpful pros).

Meanwhile, certified senior advisers and senior care managers can help identify community resources for health care and housing options; coordinate medical appointments; arrange transportation; and, in some cases, advocate on your behalf in terms of medical needs. Elder law attorneys draw up essential estate-planning documents and provide guidance about what’s needed and who to pick for key roles.

Retired human resources executive Viola Lucero, 76, has worked with a few professionals recently to put a comprehensive plan in place for herself and her husband, Tom, 76, a former customer-satisfaction consultant. The couple has no children, and with Tom’s health in decline from Parkinson’s disease, Lucero felt a growing sense of urgency. Although healthy now, she says, “I worry something will happen to me and he will be left.”

So Lucero has engaged a professional fiduciary to act as their power of attorney if she cannot, and to be an alternate health care proxy as well (her sister and niece are the primary designees). She has also worked with a lawyer to update their estate plan and recently moved to a continuing care community in Rohnert Park, Calif. Says Lucero, “I’m trying to be as proactive as possible, knowing that aging is upon us, and lives change in a nanosecond.”

But trying to tackle all the different aspects of solo aging at once can be overwhelming. “Just take things piece by piece,” Gerhardt advises. “It may take years to put together a comprehensive plan you’re comfortable with.”

Amy Stein-Milford, director of on-site and special programs at DOROT, a New York City social services agency that offers an online program for solo agers, agrees. “One of our mantras is just take that first step.” Another, she says, is to recognize that, while you may be a solo ager, you are not alone. “You’re in good company,” she says. “There are literally millions of other people out there who are aging alone as well.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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The number of Americans 85 and older is expected to nearly double by 2035, according to the U.S. Census Bureau. With age often comes the need for help with driving, medical care and daily tasks, sometimes making living alone no longer safe or practical. That’s when families consider moving to a retirement home.

“For the typical person, the thought of going to a retirement home is terrible,” says Patrick Simasko, an elder law attorney in Mount Clemens, Michigan. “In their mind, they’re going to a dump and it’s the next step to a funeral home.” But that’s not the case today.

Modern retirement communities are designed to be lively, engaging places where residents can thrive. “Senior living is evolving. It looks and feels far more vital and energetic as the Baby Boomers demand that,” says Lynne Katzmann, CEO of Juniper Communities, which runs care facilities in Colorado, Delaware, New Jersey, Pennsylvania and Texas.

Retirement homes also provide community and many ways to socialize with others. That can be just as valuable for retirees currently living alone at home, even if they are able to take care of themselves. “It opens a whole other chapter of life. A lot of seniors say ‘I regret not moving earlier,’” says Jonathan Rosenberg, owner of Twin Cities Care, an elder care referral agency in Minneapolis.

With that in mind, here’s what to know about retirement homes, including your options.

1. Retirement homes have come a long way in quality

Going back a few decades, there wasn’t much in terms of selection for retirement homes. “Back then, you could go to a skilled nursing facility or to a place in Florida, and that was it,” says Katzmann.

Today’s retirement homes nationwide are much more varied and consumer-oriented. Many provide apartments where you’re mostly living on your own, but with extra support and amenities. “Some of these places are just beautiful. They have movie theatres, libraries, gyms, happy hours and delicious food,” says Simasko.

There are various types of retirement homes, depending on the level of care and support you require.

2. Indedependent living doesn't include care

Independent living communities are designed for older adults (often 55+) who can live on their own but want a simpler, more social lifestyle.

These retirement communities provide housing, plus extras such as group activities, on-site dining, transportation and housekeeping. They do not offer medical care or assistance with daily tasks. Residents must be able to take care of themselves.

3. Assisted living offers on-site care when you need it

At an assisted living facility, you have your own apartment or home, but nursing staff and caregivers are readily available. “Assisted living makes sense for someone who needs help with some activities of daily living but not constant nursing care,” says Rosenberg from the elder care referral agency.

Common services include assistance with medications, walking and mobility, bathing and dressing. Support services can be scheduled on a daily or weekly basis or provided on demand. Medical care is also readily available in the event of an emergency. Residents wear a call button on a necklace or bracelet to summon help.

4. Specialized care facilities and nursing homes provide 24/7 support

Skilled nursing facilities serve people with serious physical or mental conditions who can no longer care for themselves, offering continuous medical oversight and assistance with all daily needs.

Specialized care facilities do the same but target specific issues. For example, a memory care facility is for someone with conditions such as Alzheimer’s or dementia. Doors are locked so residents can’t get out and hurt themselves, while the facility offers programs and therapies designed for these conditions.

A specialized facility for people with severe mobility issues is built with a focus on accessibility to enable those people to move around more easily.

5. Continuing care communities offer all types in one location

People often require more support over time, necessitating a change in the kind of retirement home. Moving to a different location would be one more hassle.

Continuing care retirement communities bundle everything in one location, allowing residents to transition from independent living to assisted living to specialized or skilled nursing care as needed.

Some places require moving to a different floor. Others allow you to receive all types of care in the same unit. “That setup is ideal for couples, so they can both stay in the same apartment even as they need different types of care,” says Rosenberg.

6. Costs are substantial

The cost of a retirement home depends on the type, location, size of your apartment and the level of care you require.

Independent living communities cost roughly $2,000 to $6,000 a month, typically just for rent and utilities, with meals being an additional expense, says Rosenberg. Assisted living starts at around $4,000 to $7,000 for the unit itself with additional charges when care is needed. Nursing homes cost around $10,000 per month.

If you go to a continuing care retirement community, expect to pay more per month than a retirement home with only one type of service, as you pay more for the flexibility to upgrade over time.

7. Government and insurance support is limited

Most retirement homes are private pay, meaning you are responsible for covering all expenses. There is no government support for independent living.

Medicare pays for up to 100 days in a skilled nursing facility, but only for temporary issues after a hospital stay, such as surgery, when you are expected to recover. Medicare does not cover extended stays for someone who cannot take care of themself.

Medicaid can cover nursing home care, but typically only after you have mostly exhausted all your other financial resources. In some states, Medicaid also covers the cost of services at assisted living, but not your room and board.

Health insurance also will not cover these costs. If you own a long-term care insurance policy, it will help pay for care in assisted living and a nursing home, including skilled nursing assistance with daily living tasks and therapy. Some policies also pay for laundry and housekeeping. Check your contract to see what’s covered.

8. Budget carefully to make your money last

Since Medicaid won’t pay for your room and board, you could lose your spot if you run out of money while in independent or assisted living, because Medicaid generally only applies once someone qualifies for nursing-home-level care. If you do qualify, some retirement homes will let you stay and collect payment from Medicaid, while others may move you to another facility that accepts it.

Given these risks, it’s essential to budget carefully, especially at the beginning. “Kids feel guilty and move their parents to the Taj Mahal of facilities right from the start, and then there are real problems when they eventually run out of funds,” says Simasko, the elder law attorney from Michigan.

9. Married couples should plan strategically

Married couples can also run into budget problems when one partner needs significant, ongoing care that drains their joint savings.

Advance planning can help protect the healthy spouse's assets by helping the other spouse qualify for government support sooner. For example, for one spouse to qualify for Medicaid in New York, their partner can have no more than $157,920 in assets. Anything above this limit must be spent down first. However, the asset limit does not consider a primary residence. If the couple still has a mortgage, they could put their savings towards paying it off rather than having that money go to the facility.

“That way the other spouse still has resources for their own assisted living,” says Simasko. An elder care attorney can discuss possible strategies for your situation.

10. Put in the time to find the right retirement home for you

Websites like AssistedLiving.org and SeniorLiving.org provide searchable databases where you can compare options in your area. Medicare and state agencies also provide research on nursing homes with quality ratings.

Build a list of possible candidates and visit each one. “Look around, is it clean, is it well-maintained?” asks Katzmann from Juniper Communities. Make an effort to speak with some of the residents and introduce yourself to the activity and medical directors. You should also see if you like the food. Most places will comp a meal as part of the tour.

Try to get a feel for the culture and community of each retirement home, as they are all unique. “I love to cook and travel. Another person might be an intellectual. I’d be looking for a place where others have similar interests,” says Katzmann.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

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Risk tolerance lowers as you age, meaning once you're retired, any significant financial changes or economic news can have a big impact on the rest of your life.

As we saw in early spring, many retirees were thrown for a loop when the stock market briefly collapsed in response to President Donald Trump's ongoing tariff announcements.

The recent One Big Beautiful Bill (OBBB) is the latest news from the Capitol that will impact retirees.

While the act didn't quite deliver on eliminating taxes on Social Security, as claimed by a misleading statement from the Social Security Administration, it does include a few significant changes for older people.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

It will take years to see the true long-term impact of the changes, such as tax-cut extensions and Medicaid cuts, but the time to plan is now. This is an opportunity to proactively plan, help protect your finances and boost your retirement.

Tax changes

Older adults have already benefited from lower tax rates from the Tax Cuts and Jobs Act, and those taxes were set to expire after the 2025 tax season. Not only does this act extend those cuts through at least 2028, but it adds a new $6,000 deduction for people age 65 and older.

The new tax deduction for many retirees was added instead of eliminating taxes on Social Security, and taxpayers 65 and older who earn under $75,000 as single filers and under $150,000 as joint filers are eligible. It's estimated to provide an average tax relief of about $1,100.

The security of additional years with lower tax rates and an additional deduction for older people means they should revisit their tax plans.

Roth conversions are a crucial part of retirement plans, and older individuals can use the tax deduction to reduce taxation for future generations through their retirement accounts.

Tax-deferred retirement accounts can lead to hefty tax bills when income is withdrawn from the account. This new tax deduction presents an opportunity, as you can use that deduction to offset taxes accrued from a Roth conversion.

It also allows you to take advantage of capital gains in a Roth account tax-free. Take advantage of this additional tax break by revisiting your Roth conversion plan and considering converting more retirement assets into Roth accounts.

Another benefit from additional tax deductions is an adjustment to Medicare premiums. These are calculated using modified adjusted gross income (MAGI), which is the income after tax adjustments, from two years ago.

While it will take a couple of years to take effect, a lower tax burden would reduce older adults' MAGI and potentially lower their Medicare premiums.

Long-term care

People older than 65 have almost a 70% chance of needing long-term care, and that can cost hundreds of thousands of dollars. Medicare doesn't cover long-term care, and a recent survey found that almost half of older adults don't know how to plan for their long-term care needs. That's a problem.

As a result, millions of Americans 65 and older rely on Medicaid, which covers thousands of Americans who can't afford health care otherwise. It's a crucial resource for older people looking for long-term care.

Some older people without long-term care plans spend down their income or assets to meet Medicaid's financial limits in their respective states and become eligible.

The OBBB makes changes to Medicaid that will raise prices for older people and limit funding for its services. We don't know the exact effect of these cuts, but it's a sobering reminder of our need to plan for health care costs in retirement.

Long-term care insurance is the easiest way to cover your expenses, but it's best to get a policy earlier rather than later because it can be difficult to qualify later.

Some annuities also have long-term care riders built into them that can help cover the cost. Health savings accounts (HSAs) can be an option to cover expenses.

Even though you can't contribute to an HSA once you are enrolled in Medicare, if you contributed to one before retirement and have money in the account, you can use the funds for costs covered by Medicare.

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Having a retirement plan is the first step to enjoying your golden years, but proper management requires constant adjustment to fit your unique goals.

The ripple effects from this budget act will continue to unfold in the coming years, and while it's difficult to predict the exact impact in the present, we can anticipate and proactively prepare your financial future.

Many impactful changes are constantly unfolding, and it's important to have a plan.

As retirees, you can't afford to risk your future. Take this as an opportunity to visit with a financial adviser to discuss your financial goals and help adjust your retirement plan for success.

Related Content

• Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on Retirement
• Is the One Big Beautiful Bill Really All That Great for Your Retirement?
• What the OBBB Means for Social Security Taxes and Your Retirement: A Wealth Adviser's Guide
• Your Golden Years Just Got a Tax Break, But There's a Catch
• Widow's Penalty: Three Ways to Protect Your Finances

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

An effort to boost the staffing in nursing homes is among the lesser-known casualties of the recently approved budget and spending law, also known as the One Big Beautiful Bill (OBBB). The new law has several provisions that are likely to affect the staffing, affodability and demand for nursing homes.

1. Reducing the number of required nurses

Seeking to address chronic understaffing, the Biden administration last year finalized a rule setting minimum staffing standards for nursing homes, including a requirement that facilities have a registered nurse on-site 24 hours a day. Critics of the rule argued it could force some nursing homes out of business. In April, the law was stricken by a federal court in Texas. The new law delays implementation of that rule for 10 years.

“This means that many current and future nursing home residents will not receive the care they need, or will be harmed, because there are not enough staff available,” says Lori Smetanka, executive director of the National Consumer Voice for Quality Long-Term Care. “It is estimated that 13,000 lives will be lost each year due to understaffing. Understaffing puts residents at increased risk of abuse and neglect. It also increases the risks to workers of injury and harm.”

2. Making Medicaid coverage for nursing home care more expensive

The law also changes the length of time that Medicaid will cover new beneficiaries retroactively. This retroactive coverage comes into play because the process for applying and being approved for Medicaid can be lengthy. It’s “complicated, and many older adults need assistance, both in gathering the information requested and filling out the forms,” Smetanka says.

Until now, once approved, Medicaid would pay for up to three months of retroactive care to make up for the time it took to get approval. “Now it will be two months. The delay will mean that some individuals will be responsible for paying out of pocket for a longer period of time, or delayed in getting accepted to Medicaid for longer,” Smetanka says.

At the same time, the law halts for ten years rules aimed at streamlining Medicaid eligibility and enrollment, according to the advocacy group, Justice in Aging. “This will make it harder for older adults to get and maintain Medicaid coverage by allowing states to maintain bureaucratic requirements, such as complex income verification paperwork and frequent renewals that currently prevent eligible people from gaining and maintaining coverage.”

Smetanka says, “We think it likely that facilities will require that individuals already be approved for Medicaid before being accepted as a resident, or have another payment source, because it puts them at risk, too.”

In 2028, the law will cap the amount of home equity an individual can have to qualify for Medicaid coverage for long-term care. This will affect those living in the 12 states that allow enrollment for people who have $1 million or more in home equity. The new law caps home equity at $1 million with no provision to increase the amount because of inflation.

“By capping the amount of equity in a home, and not adjusting for inflation, this law could force an older adult to sell their home in order to qualify for Medicaid,” Smetanka says.

3. Potentially increasing the number of people who need nursing home care

Justice in Aging says other provisions are likely to increase pressure on nursing homes as more people are forced to seek care in the facilities when Medicaid covers less home and community-based care. This, the organization says, will be the result of the law limiting taxes states can impose on Medicaid providers, which may force states to cut optional benefits or eligibility categories. “Home-and community-based services account for the majority of optional spending and are likely to be cut first, leading to longer waiting lists and more institutionalization.”

At the same time, news outlets, including the Associated Press and the New York Times, are reporting that immigration crackdowns are creating staffing problems at nursing homes, which rely heavily on immigrant workers. As noted by AP, more than a quarter of an estimated 4 million nursing assistants, home health aides, personal care aides and other direct care workers are foreign-born, according to PHI, a nonprofit focused on the caregiving workforce.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

Read More

• 10 Things You Should Know About Nursing Homes
• Mom Needs a Nursing Home. Should I Spend Down Her Assets So She Qualifies for Medicaid?
• Age in Place or Move? How to Decide Where to Live in Retirement
• How to Find the Best Retirement Community for You

Americans have a good chance of living well into old age these days, which is something to cheer about.

But it also raises serious concerns for those who haven't planned for the possibility of long-term care needs.

And the demand for those needs has never been greater.

Take a trip back through the history of aging and the numbers are startling. From 2010 to 2020, the number of individuals 65 years and over saw the largest and fastest growth in any decade since 1880 to 1890, reaching 16.8% of the total U.S. population, according to the Census Bureau's The Older Population: 2020 report.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

Projections are that by 2050, the 85-plus age group will number 19 million, making it 24% of older adults and 5% of the total population.

This longevity is wonderful for those who manage to maintain good health in their later years. But an extraordinarily large percentage of people will need some form of long-term care, which could include in-home assistance, community and assisted living or nursing home care.

According to the federal government's Administration for Community Living, someone who turns 65 today has nearly a 70% chance of requiring long-term care at some point during their remaining years.

Unfortunately, long-term care is not covered under Medicare, and too many Americans and their families aren't prepared to pay for that care, which can make a sizable dent in any retiree's assets, possibly leaving little to nothing for the person's heirs.

Just how expensive is long-term care?

As an example, the median cost in the United States for an assisted living facility in 2025 is $ $6,077 a month, according to Genworth and CareScout. A semi-private room in a nursing home is $9,555 a month.

Money disappears fast at those rates.

Options for paying for care

This is why it's crucial to consider long-term care needs when planning your retirement and set aside money to pay for them, just in case.

For a long time, one of the most popular ways to prepare was through a long-term care insurance policy. But those policies had a serious downside because they were a use-it-or-lose-it proposition.

If you actually needed care, the policy was there, helping you avoid raiding the entirety of your savings. But if it turned out you never needed long-term care, then those monthly payments, in a sense, had been for naught.

You or your beneficiaries didn't receive any kind of refund. (In fairness, that's much the way car insurance works; it's there if you need it, but provides no benefit if you don't.)

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Fortunately, there are alternative long-term care insurance options that are more flexible, allowing you to avoid that use-it-or-lose-it approach.

One option is a hybrid life insurance and long-term care insurance policy. With such a policy, if you end up needing long-term care, you can use the death benefit (the money your beneficiaries would have received when you die) to pay for it.

But if you never need long-term care, then your beneficiaries receive the full death benefit payout when you die.

Some policies also offer a cash benefit that allows you to take money out to use at your discretion for expenses other than long-term care.

Another option is to self-fund by setting aside a portion of your savings to be specifically dedicated to paying for long-term care. This could be through a separate retirement account.

With this approach, you don't pay any premiums, and if you don't need to use the money, it will be there for your beneficiaries.

Something else to consider. Let's say you buy a long-term care insurance policy using money from a tax-deferred account, such as an IRA, 401(k) or 403(b). You pay taxes when you withdraw money to pay the premium.

But if you then draw on the policy to pay for long-term care, the portion used to pay for the long-term care is treated as an accelerated benefit and is tax-free.

Putting a plan in place

Each option for addressing long-term care has its own pros and cons. For example, the premiums for a hybrid policy typically will cost more than the premiums for a use-it-or-lose-it policy.

The key is to begin thinking about this early, long before the need arises. A financial professional who works with retirees and near retirees can help you understand the options and assist you in making a decision that meets your needs, goals and budget.

Long-term care is a legitimate concern for anyone in or approaching retirement years, but with the right planning, you can limit the hit to your assets and feel more confident about the future.

Ronnie Blair contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

You've worked hard, saved wisely and planned for a fulfilling retirement. But what if the unexpected happens — early-onset Alzheimer's or another serious health event — and changes your day-to-day life?

We've heard it often: "It wasn't supposed to happen this way."

We don't plan to need long-term care, but we do need to plan how we would pay for it, just in case.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

One of retirees' most significant challenges is covering the cost of long-term care (LTC). It's not just about dollars; it's about preserving independence, protecting your family and ensuring your financial plan stays on track.

Let's break down what LTC is, how much it costs and your options for funding it.

What is it?

Long-term care refers to the services and support needed when a person can't perform at least two activities of daily living, such as bathing, dressing, eating or getting in and out of bed.

It's not typically covered by standard health insurance or Medicare. While Medicare might pay for up to 100 days of skilled nursing care, it doesn't cover custodial care, such as help with daily living over the long term.

Most of us will need some form of care. According to LongTermCare.gov, 70% of people age 65 and older will require LTC during their lifetimes, and 20% will need it for five years or more.

The cost of care

LTC costs vary depending on location and the type of care needed. Nationally, the median annual cost of a private nursing home is $127,000, according to Genworth and CareScout, but it ranges widely by state. In Alaska, for example, the cost is $364,000 a year.

Those who would like the same private nursing services at home 24/7 could pay as much as double the private nursing home rate.

Part-time home care also isn't cheap — roughly $65,000 a year for 40 hours a week — but it's more flexible.

The cost depends on how many hours a nurse is needed. Some people start with home care and transition to a facility; it depends on needs and preferences.

These costs are rising faster than the inflation rate. At an average annual increase of about 5.5%, they can quickly derail even the best-laid plans.

Types of long-term care

There are four main types of LTC, listed from least to most costly:

• Home care. Part-time skilled or unskilled services delivered in your home.
• Assisted living. Support with daily activities in a residential setting (usually without 24/7 medical supervision).
• Skilled nursing facilities. Twenty-four-hour care for those with significant medical needs.
• 24/7 at-home nursing care. Staffed 24 hours a day for those with significant medical needs who want to stay in their homes.

Having a plan can help you protect and maintain control of the care you receive.

How to fund long-term care

Understanding potential funding sources is a wealth-planning activity. We suggest working with your wealth manager or advisor to develop a plan.

Here, we explore some options, which can be combined to meet your funding needs.

Rely on personal savings and assets

Some people choose to self-fund their LTC needs. If you go this route, ensure you've set aside enough to cover three or more years of care — at today's rates, that could be $400,000 or more.

Sources might include retirement accounts (401(k), IRA, Roth) and taxable investment accounts.

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If you have a health savings account (HSA), it's a triple-tax-advantaged way to cover qualified care costs.

Sell your home

If you live alone when you need LTC and don't need it, selling your home to move into a nursing home facility is easy. If someone else still lives there, other options exist to unlock the equity.

Get a reverse mortgage

Today's reverse mortgages are safer than ever and can efficiently tap into equity while you stay in your home. Depending on your needs, there are several options from which to choose.

Buy traditional LTC insurance

Long-term care insurance policies are designed to cover LTC costs. Premiums are lower if they're purchased in your 50s or early 60s and are influenced by age, health and gender.

Policies typically cover one to five years of care. Inflation protection riders help your benefit keep pace with rising costs.

Premiums can be tax-deductible depending on your age and income.

Employer group plans might offer lower-cost options with a higher probability that the insurance carrier will cover you.

It's critical to understand that premiums can increase over time, so this isn't a "set it and forget it" option.

Consider hybrid insurance policies

Hybrid policies combine life insurance with LTC benefits, allowing you to access your death benefit early to pay for care. Linked-benefit policies provide a pool of LTC benefits and a residual death benefit.

These are appealing because you (or your heirs) can receive money back from the policy even if you never need LTC. While more expensive upfront, the premiums are fixed and won't increase.

Look at synthetic LTC plans

Can't get LTC insurance — or prefer not to? Some clients opt for a synthetic LTC strategy using low-cost variable annuities. Investment-only variable annuities (IOVAs) offer tax-deferred growth with flexibility to withdraw funds if care is needed.

IOVAs can be a great fit if you're ineligible for insurance due to medical conditions, and they pass assets to heirs if not used.

Apply to government programs

There are also several government programs, such as Medicaid, for those who need financial assistance.

Long-term care planning is about much more than insurance or assets. It's about ensuring your care aligns with your values and lifestyle, while minimizing the burden on your family.

Your CERTIFIED FINANCIAL PLANNER® and wealth manager can help you explore the best funding options based on your unique situation. Build an LTC plan into your long-term plan — so you can focus on living well today, with peace of mind about tomorrow.

Mallon FitzPatrick leads Robertson Stephens' Wealth Planning Team and delivers comprehensive wealth planning solutions for high-net-worth and ultra-high-net-worth clients. He collaborates with clients to develop a strategy that integrates tax planning, risk management, philanthropy, liquidity and balance sheet management, estate planning and investments. Ultimately, the client is provided with a cohesive wealth plan that helps increase the likelihood of experiencing good outcomes, meets their objectives and aligns with their preferences.

Related Content

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• In Your 50s? We Need to Talk About Long-Term Care
• Your Home + Your IRA = Your Long-Term Care Solution
• Will My Children Inherit Too Much?
• Are You a High Earner But Still Broke? Five Fixes for That

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Prenups and retirement planning don't sound like a match made in heaven — but there's a growing need for them to go hand in hand. Around 11,400 U.S. adults will celebrate their 65th birthday in 2025, and an increasing number of them will be celebrating a new marriage in their senior years — or experiencing the end of one.

According to a 2024 Bowling Green University study, over-65s are the only age group in the U.S. who've experienced an increase in remarriage rates. A different study noted that this is the only age group with an increasing divorce rate, and around one in three adults getting divorced (36%) is aged 50 or older.

While finding love later in life is something to be celebrated, the unique nature of a retiree’s assets can become a problem for older spouses if the marriage doesn’t last. And that's where a prenup comes in.

“For individuals entering marriage during retirement, a prenuptial agreement is an essential component of sound financial and estate planning,” says Amy Zamikovsky, a senior financial adviser and attorney at Transform Wealth in Houston, Texas.

“Unlike younger couples who typically build wealth jointly, retirees often bring established assets, income streams, and various family expectations and obligations into the marriage,” she said.

An older couple contemplating marriage is likely to face the following issues:

• Fixed incomes usually remain fixed. The higher earner in retirement typically has a fixed set of assets, including pensions, retirement accounts, real estate or business holdings. “These assets will not significantly grow or be replenished,” says Kimberly Miller, founder and chief divorce educator at PartWise, in St. Paul, Minnesota. “This creates a heightened need to preserve wealth intended for their own security and possibly for heirs.”
• Income limitations. Retirees often live on a predictable stream of income, such as Social Security and annuities. “That makes asset protection critical,” Miller says.
• Legacy concerns. There’s usually a strong desire to protect inheritances for adult children or grandchildren from a prior relationship.
• Health care and long-term care costs. “Potential obligations for a new spouse’s care can threaten a retiree’s financial stability if not clearly addressed,” Miller warns.
• Complicated Social Security benefits. A remarriage can also affect spousal or survivor benefits from previous marriages. “That makes clarity on financial dependency essential,” she adds.

Protecting retirement income with a prenup

Considering that family finances may be a touchy subject, if not completely taboo, it’s best to proceed with a prenuptial plan carefully and thoroughly. These action steps can help you complete that journey and, more importantly, set the stage for a healthy marriage.

Be realistic. For retirees (and everyone else, for that matter), a prenup should be viewed as a financial planning tool, not a sign of lack of trust or as a prediction of relationship breakdown.

“Couples should discuss how they want to handle property division, spousal support, and inheritances, especially if either partner has children from a previous marriage,” says Amanda Baron, co-founder of Jointly, a Vancouver, Canada-based legal technology company specializing in family law. “Working with professionals who understand both family law and financial planning ensures the agreement meets their unique needs.”

Document everything. Retirees should begin by listing all assets, including pensions, real estate, investments, debts and anticipated inheritances.

“The goal is to clarify what each partner is bringing into the marriage and decide what should be kept separate,” Baron says. “For the higher earner, protecting retirement income, real estate and estate plans is often the priority.”

A prenup should especially be coordinated with existing wills and trusts to avoid accidental conflicts. “Consulting a lawyer is essential to ensure both partners fully understand their rights and obligations,” Baron adds.

Additionally, focus on protecting what really matters to a retiree likely living on a fixed income. “That includes retirement savings and income streams, real estate owned before the marriage, inheritance plans for children and grandchildren, and freedom from responsibility for a new spouse’s pre-existing debts and any other needs, such as health care,” Miller explains.

Define property-related expectations. “Generally, assets acquired before marriage can remain individual property, but it's best to clearly outline all of this and then determine what will happen to assets created together during the marriage,” Miller says.

Define spousal support expectations. If there’s been a candid conversation about spousal support already, now’s the time to clarify it. “This is important for budgeting and preventing future disputes,” Miller notes. “Also include health-care and end-of-life directives or reference existing documents to avoid confusion later.”

The primary residence matters a great deal. The marital residence is often one of the most significant assets retirees bring into a new marriage, both financially and emotionally.

“A prenuptial agreement should address ownership, ongoing expenses (including taxes, insurance, and maintenance), and the non-owning spouse’s rights, if any, to continue living in the home upon the other’s death or in the event of divorce,” Zamikovsky says.

Provisions such as a life estate or buyout terms can prevent future disputes and protect the interests of both parties and their respective heirs. “Ensuring alignment on this issue is especially important when the home is already owned by one party or if adult children are involved in future inheritance plans,” she adds.

Consider a mediator. In many prenuptial cases, it’s better to go through mediation rather than individual attorneys.

“This keeps costs and conflict lower, as they are in the same room having these difficult conversations rather than going through litigious attorneys,” says Kristyn Carmichael, family attorney and divorce financial analyst at Couples Solutions Center, in Phoenix, Arizona.

“Most prenuptial agreements will have an attorney review during the process, but having a mediator shortens their timeline and helps them work together to find solutions,” she said.

A good mediator will keep the focus on these key issues, Carmichael says:

• How to keep all assets and debts separate
• Inheritance for children or other relatives (these will be covered in a will and trust, but can be a good discussion for a prenup)
• How spouses will share everyday expenses
• What happens if either spouse becomes ill or incapacitated, and how long-term care or other medical bills would be handled

How much does it cost to have an attorney draft a prenuptial agreement?

The average cost for an attorney-drafted prenuptial agreement can range from $5,000 to $8,000 per couple, according to a 2024 survey of attorneys by HelloPrenup. If the process isn’t complicated, that price can fall to $2,000.

On an hourly rate, expect nuptial process work to cost between $250 and $500 per hour for attorneys, and between $100 and $350 per hour for a mediator.

“For retirees, this investment is modest compared to the financial and emotional costs of a contested divorce,” Baron says. “Prenups for later-in-life couples are often more complex, requiring careful consideration of pensions, inheritances and existing property.”

Marrying in retirement without a prenup

Combining assets can be risky, but the stakes can become higher if you enter into a marriage near or in retirement without asset protection in place.

“Without a prenup, retirees expose themselves to standard family law rules, which vary by location, and are not typically designed for couples with blended families or established estates in mind,” Baron says.

For instance, a new spouse may be entitled to a share of retirement savings, property or support payments, even if those assets were meant for adult children or other heirs.

“This can lead to unintended disinheritance and family conflict,” Baron adds. “A prenup prevents these issues by making clear how property and finances will be handled.”

Related content

• Think of Prenups and Postnups as Financial Planning Tools
• What Older Adults Should Know about Getting Divorced and (Maybe) Remarried
• 'Gray Divorces' Can Upend Your Retirement Plans

Use these resources to help you age in place, from the Kiplinger Retirement Report.

Yourself

• Plan your lifespan: www.planyourlifespan.org A guide through options and decisions you otherwise may be forced to make under duress or that may have to be made for you. Print out or email your decisions to those who need to know your wishes
• Plan for financial and legal needs later in life: https://planforclarity.org/en/home
• Find home health aids: www.visitingangels.com and www.homeinstead.com
• Fall-prevention programs with exercises to build strength and balance can be found at YMCAs, Silver Sneakers www.silversneakers.com/blog/balance-exercises-seniors-2 and Nymbl, a balance training app https://nymblscience.com
• Alzheimer’s support groups: alz.org

Your home

• Home safety self assessment prepared by the University at Buffalo and posted by Erie County, N.Y., Department of Senior Services: https://www3.erie.gov/seniorservices/sites/www3.erie.gov.seniorservices/files/2022-03/home_safety_self_assessment_booklet.pdf
• The Home Modification Occupational Therapy Alliance (https://hmota.net) can help find a local HMOT whose specialty aligns with your needs. 269.978.8340 or info@hmota.net
• Equipment/ devices for aging and dementia: http://alzstore.com
• Retrofitting kitchens: www.shelfgenie.com
• AI-assisted help finding vetted occupational therapists, contractors and devices to modify your home and help navigate life with dementia and as you age: www.asksamie.com

Your support

• Find an aging life care expert with the search tool from the Aging Life Care Association, formerly known as the National Association of Professional Geriatric Care Managers. Go to “Find an Aging Life Care Expert” in the pull-down menu: www.aginglifecare.org
• Meal preparation: https://chefsforseniors.com
• Veterans’ caregiver support line and program: www.caregiver.va.gov

Your community

• AARP’s livability index rates communities by zip code: https://livabilityindex.aarp.org
• Community connections. The Village Movement, a grassroots movement that has more than 300 different local programs across the country to help older people connect with services: www.helpfulvillage.com
• Transportation. Gogograndparent www.gogograndparent.com
• Walkability. Plug in an address on the Walk Score site: www.walkscore.com

When you can't stay home

• Long-term care placement assistance: https://carepatrol.com

Miscellaneous resources

• Seniors Blue Book. Resources for aging, such as case managers in your community, adult day programs, advanced care planning, estate planning, financial assistance. They will mail out a free book. https://seniorsbluebook.com
• Volunteers of America. General help: www.voa.org
• Technology resources for aging in place: www.kiplinger.com/retirement/age-tech

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

Related content

• Age in Place or Move? How to Decide Where to Live in Retirement
• How to Make Your Home Safer as You Age
• How to Find the Best Retirement Community for You

"What's good for the heart is good for the brain." That's the message from experts on reducing the risk of dementia, and it means following the rules for a heart-healthy lifestyle: Regular exercise, maintaining a healthy weight, no smoking and so on.

The risk factors for dementia are complex. While lifestyle factors can be modified, others are impossible to change, such as your age and genetic makeup.

Although doctors can use tools to determine a patient's risk of heart disease, at present, there's no reliable tool for predicting someone's dementia risk. Symptoms can also be mistaken for other conditions.

How can we be on the lookout for cognitive decline in our loved ones? A recent study suggests a surprising answer.

According to research published in the Journal of the American Medical Association (JAMA) Network Open, our banking habits and our household bills could provide early warning signs of cognitive decline. If we're alert to those signs, it could make timely intervention — including heart-healthy lifestyle changes — possible.

Here's what the research showed, along with some details about signs of spending shifts that you and your loved ones might want to look out for.

Signs of financial incapacity

The researchers looked at anonymized banking records from more than 66,000 individuals. They also reviewed the banking habits of 16,742 individuals who registered a power of attorney as a result of financial incapacity.

Those records were compared with a control group of 50,226 individuals with no indications of lost mental acuity.

The research found some very clear patterns. Specifically, among those who registered a power of attorney, bank records showed the individuals were:

• More likely to report fraud
• More likely to report that a bank card had been lost or stolen
• More likely to ask for their PIN to be reset
• Less likely to log into their bank accounts, with one fewer login occurring each month
• 9.6 percentage points less likely to spend money on travel in the five years before registering a power of attorney
• 7.9 percentage points less likely to spend on hobbies, such as gardening

Those who experienced these changes were also more likely to spend money on items that were associated with increased time at home. For example, both electricity and gas bills increased in the five years leading up to the power of attorney registration.

The researchers also found that differences in spending habits increased gradually as the account holder moved closer to the date the power of attorney was registered.

Cognitive decline and your loved ones

Researchers came to a few key conclusions based on this data, including that:

• Declining financial capacity might result in a disengagement from outside activities and a retreat to the comforts of home
• Those beginning to experience lack of financial capacity might be more susceptible to scams, both because they're at home more and an easier target for phishing attempts, and because they might not be as well positioned to detect signs of fraud
• An increase in household bills could be an indicator both of more time spent at home and increased forgetfulness, such as failure to shut off household appliances

Monitoring for these behavioral changes could help researchers — and individuals — better detect some of the earliest signs of cognitive change. It could also encourage those experiencing signs of decline to seek medical help or engage in behaviors that help stave it off, such as:

• Increasing physical activity
• Adopting a healthy, balanced diet rich in Omega-3s
• Getting out to meet friends and family more frequently
• Making quality sleep a priority
• Getting enough cognitive stimulation, including doing puzzles or other activities that stimulate the brain

Family members who notice older loved ones taking far less interest in hobbies or travel should help them assess their financial fitness and begin guarding their finances before fraud occurs. As the old saying goes, prevention is better than cure.

Related content

• The Delightful Way to Protect Your Cognitive Health
• The Surprising Way to Reduce Your Dementia Risk
• Could Technology Use Help Lower the Risk of Dementia? A New Study Says Yes

If you're like many pre-retirees, you dread the task of estimating your retirement health care expenses.

That's because this somewhat complex task involves projecting expenses around unknown future health problems, while debating the merits of Medicare Supplements (aka Medigap) vs Medicare Advantage or comparing health care exchange policies if you aren't yet eligible for Medicare.

Avoiding or postponing this task can lead to the tendency to underestimate retirement health care expenses.

A Jackson study found that nearly two-thirds of pre-retiree investors underestimate their expected health care retirement costs and responded that they anticipate health care expenses significantly below the retirement average of $8,600 a year per person.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

Health care costs vary in retirement based on when you retire, how healthy you are, how long you are likely to live and health care price inflation.

In this article, you'll learn what health care expenses you might expect in retirement and how to proactively plan for them.

Retirement health care expenses

You can divide retirement health care expenses into these five common categories:

• Premiums. Monthly cost for the coverage you select
• Deductibles. The amount you pay upfront for certain services before coverage kicks in
• Cost-sharing or copays. Costs for doctor's visits, medical procedures, lab tests and prescriptions that you pay a portion of
• Out-of-pocket costs. Costs for doctor's visits, medical procedures, lab tests and prescriptions that aren't covered by your insurance
• Long-term care expenses. Costs for assisted living, nursing home care and home health aides, which are not covered by Medicare

Medicare eligibility begins at 65. According to a study from Milliman, the earlier you retire before Medicare eligibility, the more your health care costs will increase. Conversely, the longer you wait to retire after age 65, the more your costs decrease.

Living even five years longer than your targeted life expectancy will increase your health care spending by 42%.

Because health care costs tend to rise faster than general inflation, your health care spending is likely to increase at a higher rate than you may expect over a 25- to 30-year retirement.

Retiring before age 65 means you'll have to pay more of your own health care expenses because you won't be covered by employer health care insurance. You'll either need to continue your employer-based coverage — potentially at your own cost — or sign up at HealthCare.gov, also known as Obamacare and the Affordable Care Act (ACA).

Costs on the exchange depend on your income, where you live and the type of coverage you sign up for and include a combination of premiums, deductibles, copays and out-of-pocket costs.

Depending on your income, you may qualify for a government subsidy for your premium. If you don't, premiums for an individual insurance policy on the ACA Marketplace run on average between $800 and $1,200 a month for someone age 62 to 65.

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Once you are on Medicare, you'll have ongoing premiums that stack up differently depending on whether you choose a Medicare Advantage plan, which covers your hospitalization, doctor's visits, prescriptions, lab work and outpatient care, or whether you go with a Medicare Supplement plan that supplements traditional Medicare.

How to plan for health care expenses in retirement

Regardless of whether you're covered by Medicare or the ACA, yearly average medical costs in retirement — excluding long-term care — average $8,600 a year, according to the Jackson study mentioned above.

Use this as a baseline for your first year of retirement and bump it up annually to cover inflation and the higher cost of health care inflation.

A good potential rule of thumb would be to add 5% a year to the $8,600 figure and stick that in your budget.

The table below shows how health care costs, excluding long-term care, are likely to rise every five years after retirement.

Of course, your costs are likely to vary, perhaps even significantly, should you have a chronic or life-threatening health condition, but budgeting in this way will at least keep you in the neighborhood where your costs are likely to end up.

Source: SEC Compound Interest Calculator

A final word

Health care expenses could be a major factor in retirement income and expense planning.

By understanding what your health care costs are likely to be in retirement and factoring those costs into your retirement expense budget, you're likely to create a more realistic idea of your retirement expenses and avoid unexpected, budget-busting expenses.

Lucas Cox, CFP®, CKA®, RICP®, NSSA® is a financial advisor at The Lighthouse Planning Company in Russellville, Arkansas, and a licensed insurance professional. AR insurance license #16128263. Investment advisory services offered through CreativeOne Wealth, LLC, a registered investment adviser. Confident Financial Solutions and CreativeOne Wealth are unaffiliated companies. We are not affiliated with or endorsed by Medicare or any government agency, and do not provide tax or legal advice.

This material is for informational purposes only and should not be construed as a recommendation or advice for your particular situation. Insurance product guarantees are backed by the financial strength and claims-paying ability of the issuing company.

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• How to Age-Proof Your Retirement Plan

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Retirement planning has to change. We're living longer. Social Security is under pressure. Long-term care is costly and getting even more expensive.

Think of your retirement savings as not only your 401(k), IRA and other qualified savings, but also the value of your home. And forget about rules of thumb. Think instead about refinements that make your plan your own.

What's your base plan?

In my previous two articles — Your Home + Your IRA = Your Long-Term Care Solution and What if You Could Increase Your Retirement Income by 50% to 70%? — I described IRA4Income, which delivers more income to meet budgeted expenses along with liquid savings to enable, for example, the coverage of typical long-term care costs.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

We explained how to achieve these results by using financial products that are "off the shelf":

• An IRA account invested 50/50 in fixed income and stock investments
• Lifetime income annuities with income starting immediately (single premium immediate annuity, or SPIA) or in the future (qualified longevity annuity contract, or QLAC)
• A home equity conversion mortgage (HECM) that generates income and liquidity

Those pieces aren't exotic, but with our approach, called IRA4Income, we provide an individual with a "base plan" built around an allocation among and between asset classes, put in place with economic assumptions, such as:

• Rates of return on investments
• Personal planning choices, such as the percentage of increase in income
• Current interest rates based on a survey of annuity and HECM contracts

To measure the value of this planning model, we compared our results to two ends of the retirement spectrum:

• A single premium income annuity (SPIA) that would provide all guaranteed income but no liquid savings
• Investment-only plans with no guaranteed annuity income

Both of those and IRA4Income are based on a consistent set of assumptions.

While quite different in design but with consistent assumptions, the IRA4Income plans provide high starting income, they continue for life, and they have liquid savings late in retirement when the money will most likely be needed to cover long-term care.

Why do you personalize?

As the results below show, a base IRA4Income plan provides attractive results in the two areas we're working to improve: starting income and liquid savings at age 90.

Once you have a base plan that delivers the income and liquid savings, an adviser can help you modify it to better meet your personal objectives. The answer, unlike certain planning methods, is not simply to spend less.

Below, I provide examples of plan modifications, again with an emphasis on starting income and liquid savings.

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How do you personalize?

You can adjust income. A relatively simple way to adjust your starting and ongoing income is to revise the inflation protection assumption. Set out below is an example at different ages of what a change in the percentage increase can provide.

You can manage risk. In refining your plan, do you assume lower or higher assumed rates of return? If you aim for the high starting income you may want to use the base plan assumption of 8%, or a lower rate if you want to take less risk. The differences are shown here.

You can manage your legacy. Annuities are an important tool to create lifetime income in a plan. One feature of these lifetime annuities can be a payout to your beneficiary. You may want to provide beneficiary protection on early passing, as evidenced in the following table.

You can minimize taxes. Retirees who use just one source of savings to fund their retirement — their IRA or 401(k) — will pay taxes when distributions are made. Drawdowns from a HECM line of credit are not taxable and provide some tax benefit.

If taxes are a major consideration, you might consider using a portion of personal (after-tax) savings and reduce taxable portion, as seen here.

Now, create your options

The benefits of IRA4Income include increased income and more liquid savings. This combination of your IRA and your home can increase your income from your IRA-based planning by 50% to 75%.

While that increase sounds great, you have the ability to easily stress-test those results and anticipate long-term care or other events that can be planned for.

To get started, order an IRA4Income base plan as a great starting point for future refinements like those mentioned above.

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• How Your Home Can Fill Gaps in Your Retirement Plan

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

It's a question we hear often from financially confident retirees: "I've done well. I have more than enough saved. Why would I need a long-term care plan or long-term care insurance?"

We get it. For many, traditional long-term care (LTC) insurance feels like a gamble — you pay in and hope you never use it. If you don't end up needing care, it can feel like wasted money.

Then there are the asset-based options — LTC benefits built into life insurance or annuity contracts. These plans can offer significant value.

Example: A healthy 59-year-old who funds a policy with $100,000 could secure $650,000 in LTC benefits by age 80, thanks to 3% compound inflation protection for life. Even if care is never needed, a $108,000 death benefit goes to heirs. Underwriting is often easier, too.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

But some still hesitate, thinking that money might perform better in the market. And many don't have a plan for their long-term care, period — with or without insurance.

Taking care of your spouse

Even couples with substantial assets can face tough choices when one partner needs care.

Without a plan:

• The healthy spouse may have to cut back their lifestyle or dip into savings
• Caregiving often falls on them — physically, emotionally and financially

Caregivers often feel sadness, anxiety and guilt, combined with the grief of watching a partner change, according to LifeCare Advocates.

And it's not just emotional. The landmark Caregiver Health Effects Study found caregiving strain can be deadly: Spouses under stress were 63% more likely to die over four years than those who weren't caregiving.

The physical toll is real:

• 46% of caregivers say it impacts their health
• Fatigue, sleep loss and injuries are common
• Many skip their own doctor visits due to time constraints and stress

Protecting your kids

Many people say, "If something happens, my kids will help." And they probably will.

But have you thought about what that really means?

Fifty-three million Americans are unpaid caregivers, often while holding down full-time jobs, according to insurance company Guardian.

Most caregivers are in their 30s, 40s and 50s, balancing careers, caregiving and raising children. Many belong to the "sandwich generation," supporting aging parents and kids at the same time.

Ask yourself:

• Should your daughter reduce her hours — or risk her career — to help with your care?
• Should your son miss his child's soccer games to coordinate home health visits?
• How will stepping back from work affect their ability to save for retirement or college?

Caregiving hits hard

Consider these statistics, from Guardian Life Insurance's Standing Up and Stepping In study:

• 20% of working caregivers have taken a leave or demotion
• 27% provide 30-plus caregiving hours weekly, yet most don't feel safe discussing it at work
• Only 1 in 4 report good mental health, and nearly half say caregiving strains their relationships and quality of life

And the costs keep climbing:

• 70% of individuals turning 65 today could face a long-term care event, according to LongTermCare.gov
• According to the California Partnership for Long-Term Care, the cost of care could increase by at least 4.6% annually

Many parents hope to leave a financial legacy, but unintentionally leave a logistical and emotional burden.

Sometimes families delay professional help, not because they can't afford it, but to protect an inheritance. That can create tension, especially when caregiving falls unevenly among siblings.

So ask yourself:

• Would you rather leave your children money or memories?
• Do you want them to be with you — or to manage you?

A care plan — whether self-funded or insured — doesn't just protect assets. It protects your kids' health, relationships and future.

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When care is prefunded, it's easier to say yes to help — without guilt or second-guessing. Your loved ones aren't scrambling. You've already made the hard decisions.

Two different outcomes

For me, long-term care insurance gave my dad the freedom to live life on his terms. He knew his care was covered, which meant my mom could continue to be his wife — rather than becoming his nurse — and their savings could be used for joy, not just medical bills.

For my colleague Caprice, an insurance professional, it was different. When her mom needed care, there was no plan. Caprice and her sister stepped in, each writing monthly checks to cover assisted living. It was done with love, but it came with stress and sacrifice.

Two different families. Two different outcomes. Same desire — to care for the people we love with dignity, and without regret.

Final thought

You may never need long-term care. But if you do, wouldn't it be better to have a plan so that your loved ones can focus on being there, not doing everything?

Even if you have plenty of money to pay for care, you still need to develop a plan so that everyone is on the same page and knows where to turn for help.

This isn't just about whether you can afford to self-insure. It's about whether you want to.

A good adviser can help you:

• Understand today's and tomorrow's care costs
• Assess your personal risk
• Explore whether traditional or asset-based coverage fits your goals

More than that, they'll help you build a plan that:

• Preserves your relationships
• Protects your lifestyle
• Keeps your options open

Because when the time comes, your spouse should stay your partner, your kids should stay your kids, and your legacy should stay intact.

It's not just about you. It's about everyone who loves you.

Caprice Torrisi, a licensed insurance professional at Vitality Investments, contributed to this report.

Hypothetical examples used are for illustrative purposes only.

Investment advisory services offered through Brookstone Wealth Advisors, LLC (BWA), a registered investment advisor and an affiliate of Brookstone Capital Management, LLC. BWA and (insert your DBA name here) are independent of each other. Insurance products and services are not offered through BWA but are offered and sold through individually licensed and appointed agents.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Many Americans eye retirement with trepidation. The years that should be a time to relax, travel, start a hobby or hang out with the grandkids are a source of anxiety for many.

According to an AARP survey, 61% of Americans worry they won't have enough money to fund their retirement.

In some cases, there is a reason for uneasiness. Most of us spend our lives depending on a regular paycheck to meet our needs and wants. As long as we're working, that paycheck shows up and provides a sense of security.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

When we retire, though, the paycheck stops, and something must replace it. Social Security helps, but while Social Security supplements our income needs in retirement, it doesn't provide enough to completely replace that salary.

On average, Social Security will replace about 40% of your annual pre-retirement earnings.

The trick then becomes to make up at least part of the difference, and that's where apprehension nudges its way into people's lives. They look at their retirement savings or investments and don't like what they see, as the numbers don't add up to what they feel they will need.

This is especially deflating because retirement also comes with financial challenges. Unexpected expenses crop up. The market can take a dive, putting a dent in your portfolio.

Health problems potentially lead to large bills, and if you retire before you turn 65, you will need to arrange for health insurance until you qualify for Medicare.

Also, you may need long-term care at some point in your life, a costly expense that can drain your finances.

Putting a plan in place

So, how do you avoid becoming one of those retirees or people approaching retirement who are uptight about finances?

You can help reduce at least some of that worry by putting a plan in place so that, when you arrive at retirement and your paycheck disappears, you are positioned with better odds of flourishing.

Here are just a few of the steps you can take to potentially create a more confident retirement:

1. Claim Social Security at the best time for you

Deciding when to claim Social Security can make a tremendous difference in how it affects your retirement. The full retirement age for most people these days is 67, but you can take Social Security as young as 62.

Be warned, though: If you claim it that early, you will receive a reduced monthly benefit for life. You can also postpone claiming Social Security until you are 70 and boost the amount of your benefit in the process.

At first glance, the answer might seem simple: Delay until 70 and get the largest amount. But other factors can come into play, such as your personal financial needs, health and family.

Determining when you should claim your benefit can be complicated, so it's good to consult with a financial professional who can help you review the options and make an informed choice.

2. Create other income

Social Security helps with your retirement income, but you need additional sources as well. One thing to keep in mind: Different income sources are more attractive in different economic environments.

For example, a fixed index annuity may be a good choice in a down market. It provides a monthly income and the insurance company that issues it guarantees a fixed interest rate. You are also protected against loss of your principal.

The downside is that a fixed index annuity generally has caps that limit how much you can gain. That can be detrimental in a strong market when such options as mutual funds or exchange-traded funds (ETFs) could be the better alternative.

3. Plan for long-term care

About 70% of those who live to 65 will require some form of long-term care at some point, and such care is pricey.

For example, the median annual cost of a semi-private room in a nursing home is $111,325, according to the Genworth and CareScout annual cost-of-care survey. A private room is $127,750.

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One option for paying for this is long-term care insurance. Once again, a financial professional can discuss with you what to consider when planning for the possibility of long-term care.

Ask for help with retirement planning

Certainly, there is plenty to consider as you plan for retirement. That's why it's a good idea to seek assistance from a professional who understands the potential challenges and the options available to you to help you avoid them.

Then, with a solid plan in place, you can spend more time focused on enjoying the new adventures and opportunities that retirement brings.

Ronnie Blair contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Insurance products are offered through the insurance business Golden Years Financial. Golden Years Financial is also an Investment Advisory practice that offers products and services through AE Wealth Management, LLC (AEWM), a Registered Investment Adviser. AEWM does not offer insurance products. The insurance products offered by Golden Years Financial are not subject to Investment Adviser requirements.

Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. None of the information contained on this website shall constitute an offer to sell or solicit any offer to buy a security or any insurance product. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. Golden Years Financial is not affiliated with the U.S. government or any governmental agency.

Any references to protection benefits, safety, security, steady and reliable income, or lifetime income streams on this website refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by insurance company. Annuities are not FDIC insured. 3081749 – 6/25

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Few things can disrupt a retirement like the need for long-term care.

Long-term care comes into play when you need help with daily living activities such as bathing, eating or dressing.

The cost of care can vary by state and facility, but Genworth and CareScout estimate the national average cost for a semiprivate room in a nursing home in 2025 is $9,555 per month, or $114,660 per year.

By 2045, that cost is expected to jump to $17,258 per month, or $207,096 per year.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

And that is for one person — double the cost if a husband and wife need care at the same time. This is a problem for every generation.

Here's how you can prepare for long-term care costs by age.

People younger than mid-50s

Younger people who need life insurance for their family should look at long-term care riders as an add-on — this can help them later in life.

I usually recommend my younger clients consider a mix of term and permanent whole life insurance to help pay for the kids' college or pay off the mortgage if one spouse dies. I also recommend adding on the long-term care rider.

The long-term care rider allows the insured to use some of the life insurance death benefit for long-term care costs, assuming the insured qualifies for long-term care (usually defined as the inability to perform two out of six daily living activities).

I usually find the cost of the rider to be small relative to the premium, but that will depend on the policy and the client's age and health.

Either way, I think this is a nice two-part solution at least worth reviewing — younger people have the life insurance they need for their family, and the long-term care rider adds protection they may need in the future.

People in their mid-50s

Later to middle-aged people may find whole life insurance to be cost prohibitive. Here, I recommend my clients look at hybrid long-term care solutions. These are life insurance policies that have an extra kicker for long-term care costs.

Hybrid policies have several benefits:

• They come with guaranteed premiums — the insurance company cannot raise the cost
• They have a return-of-premium feature —if you don't use the coverage, you can usually get back a healthy amount of your premium
• There is also a death benefit if you don't use the long-term care benefits

The downside is the premium commitment may be high or higher than some anticipated. You may not be able to buy all the coverage you want, but then again, some coverage may be better than no coverage.

There is also creditor risk — the insurance company could become insolvent — so you want to work with a reputable company.

I advise clients to schedule their hybrid insurance premiums during working years so they can have a paid-up policy by retirement. Or they can purchase a one-time lump sum and be done with it.

The law now allows you to transfer old whole life insurance policies tax-free into hybrid policies, via a 1035 exchange. Medical underwriting is needed for the new policy.

People in their 60s

Long-term care insurance quickly becomes less attractive as we age — the cost can be quite high. There may also be medical conditions that preclude getting coverage.

Traditional long-term care policies may be an option. These are pay-as-you-go policies. However, the premium is not guaranteed, meaning the insurance company can increase it.

If you are looking at a traditional long-term care policy, you may want to review your state's partnership plan. Partnership plans allow you to exclude the benefits paid from a traditional long-term care policy from Medicaid eligibility rules.

For example, if your state partnership long-term care plan paid $200,000 in long-term care benefits, then $200,000 of your assets — IRA, 401(k), bank account — are excluded from the Medicaid eligibility calculation. That means you don't have to spend down all your assets to qualify for Medicaid.

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Partnership plans are not perfect. Some states have few participating insurance carriers. Certain features also need to be included, such as inflation protection, which is helpful, but can be expensive in your 60s.

I think at this age, it may come down to self-insuring most of the risk and looking at some scaled-down long-term care insurance to cover the worst-case scenario, like an extended need for care.

Summing it up

Ignoring the need for long-term care may cost your future self or put a burden on those around you. Self-insuring the cost — using your own assets — may be a viable plan for some.

But the risk is unknown — what if you need care for 10 years? What if your spouse is unable to help? What will the cost look like by the time you need care?

Women face a unique challenge since they may live longer, and living longer increases the odds for long-term care.

There are a lot of unknowns. For these reasons, no matter our age, we need to start having a conversation and developing a plan.

For more information, email the author at maloi@sfr1.com or register for an upcoming Long-Term Care Webinar on July 15 or July 22.

Investment advisory and financial planning services are offered through Summit Financial LLC, a SEC Registered Investment Adviser, 4 Campus Drive, Parsippany, NJ 07054. Tel. 973-285-3600. This material is for your information and guidance and is not intended as legal or tax advice. Clients should make all decisions regarding the tax and legal implications of their investments and plans after consulting with their independent tax or legal advisers. Individual investor portfolios must be constructed based on the individual's financial resources, investment goals, risk tolerance, investment time horizon, tax situation and other relevant factors. Past performance is not a guarantee of future results. The views and opinions expressed in this article are solely those of the author and should not be attributed to Summit Financial LLC. Summit is not responsible for hyperlinks and any external referenced information found in this article.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

It's no secret that the United States ranks near the bottom of high-income countries when it comes to caregiver support policies.

What is less known is the emotional, social and financial toll it takes on the 2 in 5 Americans who identify as family caregivers, according to a recent study conducted by Edward Jones in collaboration with Morning Consult and Age Wave.*

Emotional and social impact

Caregiving can be both fulfilling and rewarding, according to 80% of the caregivers who participated in the study.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

However, it's also a significant emotional responsibility, especially when it falls to one person.

For example, those caring for aging adults are often managing household tasks, providing emotional support and assisting with medical and financial needs while also maintaining their own households and caring for their children.

It is little wonder that these caregivers, whose responsibilities frequently exceed their capacity, are also stressed (83%), burnt out (77%) and, in some cases, experiencing symptoms of depression (60%).

Overburdened caregivers also find it harder to prioritize their personal health and well-being (67%) over the loved ones in their care.

Financial impact

Half of those caring for aging adults are ages 30 to 64, a life stage that coincides with peak career demands and earning potential.

Unfortunately, with little to no federal or employer support, overwhelmed caregivers often make risky financial decisions that can jeopardize their own financial wellness and retirement security to ensure proper care for their loved ones. According to our study:

• 25% of caregivers stopped working completely
• 24% reduced their work hours or took leave from work
• 18% reduced contributions to their retirement accounts
• 10% passed up career-advancement opportunities

The costs of unsupported care are also causing caregivers to dip into their own pockets, with 29% of study participants reporting they incurred out-of-pocket expenses in caring for aging adults.

According to an AARP report, caregivers spend an average of $7,242 per year out of pocket for caregiving-related costs, including expenses for home modifications, medical supplies, transportation and paid help.

When it comes to out-of-pocket costs for quality childcare, Americans pay some of the highest prices in the world.

In the face of these financial headwinds, it's easy to understand why the top financial concerns caregivers say they face include rising costs and inflation (56%) and inadequate retirement savings (42%).

Support from an unexpected resource

While it might seem counterintuitive, a financial adviser is the most versatile expert a caregiver can have in their support circle. They can connect a caregiver with a roster of professionals to address both financial and emotional needs, including health care experts, therapists and social workers.

By taking a holistic approach, financial advisers are able to help caregivers navigate the complex realities of care while planning for long-term stability and well-being.

One of the greatest fears of aging for most of us is becoming a burden on our children.

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That sentiment was validated by 86% of the respondents in the study. The top reason caregivers, particularly those caring for aging adults, seek professional financial advice is to prepare for their own future care.

While more than half of caregivers reported not working with a financial adviser, those who do reported being more confident in their financial future, according to the study.

Bipartisan support for caregiving

More than two-thirds of Americans (68%), regardless of political affiliation, say the government is not doing enough to support caregivers.

Further, the research found that Americans support enacting legislation that would aid caregivers, with more than three-fourths of both Republicans and Democrats in favor of such policies.

In addition to stronger, more consistent government support, 3 in 4 adults (74%) believe employers should offer such benefits as financial support or flexible work arrangements for employees with caregiving responsibilities.

This is particularly supported by caregivers of children under age 18.

At Edward Jones, we wholeheartedly agree. That's why we strongly support the Improving Retirement Security for Family Caregivers Act and the Catching Up Family Caregivers Act.

The goal of this bipartisan legislation is to mitigate the long-term financial impact on caregiver financial security by offering enhanced retirement savings opportunities for unpaid or underemployed family caregivers.

How caregivers can take action

If caregiving touches your life or the life of someone you love, take action today.

Start by creating a plan — don't wait for a crisis to force your hand.

Have honest conversations with your loved ones, especially aging parents, about their needs and wishes.

Understand the financial realities of caregiving and take steps to prepare, including building an emergency savings account to handle the unexpected.

Your proactive choices today can make all the difference tomorrow.

To learn more about this research, visit www.edwardjones.com/caregiving.

* For the purpose of this study, caregivers are defined as those caring for children under 18, those caring for children or adult children with special needs, and those caring for aging parents, in-laws or other relatives or friends 65 or older.

Related Content

• Five Ways to Ease Caregiver Stress
• How Caregivers for Adults Can Save on Taxes in 2025
• How to Hire a Caregiver: Tips for Finding the Right Fit
• How to Create a Retirement Income Plan to Cover Caregiver Costs
• Lost Your Way Financially? How to Get Back on Track

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

For many homeowners, the family home represents far more than a place to live. It's often the single largest store of wealth on their balance sheets.

Yet, when it comes to planning for retirement, long-term care needs or estate strategies, home equity remains one of the most underutilized assets.

There are several strategies available to homeowners looking to convert their equity into income or financial leverage:

Home equity lines of credit (HELOCs). These revolving credit lines require repayment and are typically best for short-term or planned expenses. They require good credit and reliable income, but they add debt to the homeowner's balance sheet.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

Reverse mortgages. This well-known option allows homeowners to stay in their homes while receiving income. The downside is that interest accrues over time, often significantly reducing the remaining home equity.

Reverse mortgages also include such costs as insurance premiums and origination fees.

Cash-out refinancing. Homeowners refinance their mortgages to take out a lump sum of cash. This strategy can be viable in low-rate environments, but in today's high-interest landscape, it can dramatically increase monthly payments.

Shared equity models. These newer solutions offer homeowners the ability to sell a minority share of their future home value in exchange for cash today.

Typically, this method doesn't involve monthly payments or interest. Like a reverse mortgage, they're nonrecourse, meaning there is no personal liability.

The shift: From debt to shared value

Unlike traditional financing options, shared equity solutions aren't loans and don't require servicing debt obligations.

They're designed to be a strategic enhancement to an adviser's toolkit, helping reposition home equity from a passive asset into an active part of a client's overall financial strategy.

Using shared equity solutions is similar to using cash on hand.

Why it matters now

There is an estimated $35 trillion in home equity in the United States, according to the Federal Reserve Bank of St. Louis, with 41% of homeowners carrying no mortgage debt.

Meanwhile, the cost of retirement continues to rise, longevity risk is real, and funding long-term care is an increasing concern.

At the same time, interest rates and market volatility have made it more difficult for advisers and consumers to rely solely on traditional investment strategies.

Liquidity needs often collide with the desire to preserve and grow assets, supported by the fact that in 2024, according to LIMRA, more than $400 billion of new life insurance, annuity and long-term care insurance premiums were primarily funded with cash or through investment portfolio sales.

That reduces liquidity, creating tax consequences and limiting future investment growth opportunities.

Weighing the tradeoffs and tailoring the strategy to you

Each option presents distinct advantages and tradeoffs.

• Borrowing strategies offer immediate access to cash, but the debt can add pressure in retirement.
• Reverse mortgages reduce financial stress in the short term but diminish estate value and can be complex to unwind.
• Shared equity solutions, such as CHEIFS (Cornerstone Home Equity Insurance/Investment Funding Solutions), where I am the co-founder and CEO, provide tax-free cash without adding monthly obligations, but the homeowner shares a portion of the future home value upon sale or refinance.

No one-size-fits-all solution exists.

The right path depends on your financial goals, income, health outlook and estate planning intentions.

• If your priority is maintaining full ownership, a HELOC or refinance might make sense.
• If your objective is to protect cash flow without monthly debt obligations, reverse mortgages or shared equity models could be a better fit.

The key is to align your solution with your broader financial strategy.

Applications for homeowners and advisers

The versatility of home equity optimization through shared home equity products spans a range of planning needs:

Long-term care (LTC) planning. Homeowners can use tax-free funds to purchase dedicated LTC policies or hybrid life/LTC products, ensuring protection against future health care costs.

Lifetime income. Funds can be used to purchase immediate or deferred-income annuities, helping bridge retirement income gaps without drawing down investment portfolios.

Legacy and estate planning. Liquidity from home equity can fund irrevocable life insurance trusts (ILITs), charitable-giving strategies or intergenerational wealth transfers.

In-home health care. Homeowners can secure funding to age in place, enhancing quality of life while retaining independence.

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In-force policy funding. Clients with valuable existing life, annuity and/or LTC policies can use shared equity solutions to maintain or enhance these assets without cashing out or surrendering valuable benefits.

Pros and cons of shared home equity to consider

Pros:

• No monthly payments or debt service, with no fixed repayment term
• No impact on credit scores or cash flow
• Retention of homeownership rights and lifestyle
• Tax-free liquidity
• Flexible use of funds across planning needs and lifestyle enhancements
• Adviser-driven distribution to align with holistic planning

Cons:

• Future appreciation (and depreciation) of the home is shared with the company you're sharing equity with
• It's not a suitable solution for homeowners planning to sell or relocate in the short term. As the home is partially owned by an investor, it might be more challenging for homeowners to leave their homes as a legacy for their heirs without proper planning

Looking ahead

Optimizing home equity is no longer just about borrowing or downsizing. It's about managing wealth more intelligently to support strategic, tax-efficient financial plans.

Shared equity solutions are modern financing innovations that offer pragmatic alternatives that empower both homeowners and financial advisers to achieve their goals while maintaining control, flexibility and long-term value.

Related Content

• Reverse Mortgages: 10 Things You Must Know
• What Home Equity Is and Why It's a Valuable Long-Term Investment
• How a Home Equity Line of Credit (HELOC) Works
• Refinancing Your Home

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

If you want to retire with minimum money worries, you have a few options: Marry really well, pick the Powerball along with the other winning lottery numbers or consider a personalized retirement plan that produces high levels of income while maintaining and growing liquid savings late into retirement.

Most retirees need to solve for a couple of problems. They want lifetime income to cover their budget, including the occasional splurge, and a way to pay for the real likelihood of long-term care, which 70% of us will face. We’ll cover that in more detail below.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

A plan that addresses both income and savings

I wrote about how that personalized IRA4Income plan I mentioned above works, in my article What If You Could Increase Your Retirement Income by 50% to 75%?, and here’s a quick description:

IRA4Income is a multi-asset class retirement plan that addresses both income and savings. It will smooth out the effects of market gyrations and unplanned expenses, but for this article, let’s focus on long-term care expense.

Using our Go2Income planning technology, we’ve put the following assets together into IRA4Income:

• An IRA account invested 50/50 in fixed income and stock investments
• Lifetime income annuities with income starting immediately or in the future
• A home equity conversion mortgage (HECM) that generates income and liquidity

This will become important when we need to cover LTC expenses.

How big of an issue is long-term care?

More than two-thirds of retirees will incur an event requiring some form of long-term care.

Here are the median annual costs in 2025, depending on the type of care, according to CareScout and Genworth:

• Home health aide (44 hours a week): $80,000
• Assisted living facility: $73,000
• Semiprivate nursing home: $115,000
• Private room in a nursing home: $132,000

These costs will vary considerably by region. Here’s a projection of average costs considering the duration of a stay for a man, a woman and a couple.

For the purposes of the analysis below, we’ll assume $100,000 per year for five years, for a total of $500,000.

How does a retiree address this challenge?

Long-term care insurance is one solution. However, many don’t qualify or balk at the annual cost, which averages $2,000 to $4,500 per person and usually increases every year.

There often are sizable deductibles, and premium rates are not guaranteed.

Despite these issues, it is worth considering, particularly if you can cover a large portion of the event (deductibles) with your liquid savings.

Another possible solution is to use your liquid retirement savings exclusively, provided it doesn’t have an adverse impact on your retirement income. That’s where IRA4Income comes in.

For a sample male retiree, age 65, with $1 million in IRA savings and $1 million in the value of his house, here are the income and liquid savings with no adjustment for LTC costs.

Looks pretty good. However, that $500,000 event could come at any time.

How to build a self-insured plan

We’ll assume in this example that our retiree doesn’t have LTC insurance. (According to KFF, only 14% of people who are 65 and older do.) So, let’s build a self-insured plan around IRA4Income as follows.

• Set aside a portion of higher income from IRA4Income each year into a new investment account with low income taxes. In our retiree’s case, he’ll take $5,000 per year out of his $75,000 (and growing) income each year.
• When LTC costs appear, withdraw funds from the IRA account first. Since the bulk of the LTC expenses are tax-deductible in his situation, he’s not incurring a large tax bite on these withdrawals.
• Take a portion of the costs out of the new investment account and avoid drawing down on the HECM net line of credit, therefore preserving the highest value of his house to pass to his kids.

Now compare this to building a plan with only an IRA account, allocated solely to investments. Here’s what the savings under these two strategies look like.

In this scenario, the savings run out under the IRA-only strategy, and our retiree will have to sell his house or spend down the assets to qualify for Medicaid to pay for his long-term care.

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How to get started

Here’s a list:

• Check out LTC insurance. The earlier you buy it, the lower the premiums, although the insurance companies are allowed to increase premiums every year. An IRA4Income plan, with its higher income and savings, means your policy can have a large deductible.
• Get an estimate of costs in your region. The cost of services varies significantly, with the Northeast and West Coast being the most expensive. Insurers price policies based partly on expected future claims, so regions with higher caregiving costs lead to higher premiums.
• When building your own IRA4Income approach, request a plan that considers LTC costs. You can decide which options work best for you and make further adjustments until you have a plan that fits the needs of you and your family.
• Make sure your plans are communicated to family members or an adviser.

If you’re ready to consider an IRA4Income plan, visit Go2Income and create your own plan.

Related Content

• What if You Could Increase Your Retirement Income by 50% to 75%? Here's How
• What the HECM? Combine It With a QLAC and See What Happens
• Transform Your Retirement Plan With This Powerful Combo
• How Combining Your Home Equity and IRA Can Supercharge Your Retirement
• How Your Home Can Fill Gaps in Your Retirement Plan

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Retirement planning has as much to do with amassing and spending your nest egg as it does with determining your health care needs.

Nobody wants to think about getting ill or injured when they get old, but it’s inevitable for many. How inevitable?

Roughly 70% of Americans age 65 and older will require long-term care at least once in their lifetimes, according to the U.S. Department of Health and Human Services. That encompasses everything from a nursing home to in-home care. The amount of care a person needs depends on their unique circumstances, but either way, it isn't cheap.

A semi-private room in a nursing home, on average, costs $9,581 per month, while a private room is $10,798 a month, according to Genworth’s 2025 Cost of Care survey. A home health aide will cost you $6,673 per month.

Even if you are in perfect health during retirement, it can be expensive. Fidelity Investments estimates that a 65-year-old retiring this year will spend $172,500 in health care. That’s up 4% from $165,000 in 2024.

In 2002, the first year Fidelity put out an annual estimate, the cost was $80,000. That doesn't account for any unforeseen illnesses or injuries that might require additional care.

“Health is wealth,” says Nilay Gandhi, a senior wealth adviser at Vanguard. “Without health, there’s not much anyone can do, regardless of how much wealth they have. Health care expenses are one piece of the puzzle for retirees and pre-retirees.”

1. Decide what kind of health care you want in retirement

To prepare for health costs, Gandhi encourages investors and their financial planners to follow a multistep process (PDF) that begins with determining the type of care you want and how much you can afford.

If you need round-the-clock assistance, do you prefer it at home or within a facility? If you get injured or ill, do you want insurance to cover the cost of care, or do you want to pay for it out of savings?

Once you decide on the type of care, create the necessary documents to ensure your wishes are met if you're ever incapacitated and can’t make your own decisions.

Some of those documents include a will, a financial power of attorney and an advance health care directive or living will.

After that, it's time to figure out how you’ll pay for it. You have options. Insurance is one; using your savings is another.

2. Know what Medicare does and doesn't cover

Any health planning for retirement should first factor in Medicare, which kicks in at age 65. Most retirees will have to choose between original Medicare or Medicare Advantage, which will have a direct impact on health expenditures.

Original Medicare tends to have what Vanguard says are substantial deductibles, as well as co-insurance. There is no limit on what out-of-pocket costs you might owe. Since Medicare doesn't cover dental, vision and hearing exams, you'll need a supplemental Medigap insurance plan.

A Medigap insurance plan is health insurance that private companies sell to help cover some of the costs that an original Medicare plan does not cover.

Another option is a Medicare Advantage Plan, which is sold by a select group of private insurers and replaces original Medicare coverage. These plans tend to have lower costs and more benefits, but the doctors within the network can be limited.

"If cost is the primary concern, Medicare Advantage will usually lead to lower health care costs over time (though it may be more expensive in specific years in which you experience poor health outcomes)," according to Vanguard. "Original Medicare with a supplement will tend to provide a more flexible choice of health providers and more predictable costs, regardless of your health status in any particular year."

3. Decide when insurance makes sense

Long-term care insurance is a popular choice because it makes it easy. You pay a monthly premium, and if you ever get sick, your insurance covers it. You get peace of mind, but there’s a catch.

Depending on your age and health, it can be pricey, ranging from $100 and up per month. The older you are, the higher the monthly premiums.

There are also limitations on what it covers. For it to kick in, you need to be considered chronically ill, unable to perform at least two activities of daily living (ADLs) without assistance or experiencing cognitive decline and requiring supervision.

Something to keep in mind: While prices are supposed to be the same over time, it's not uncommon for premiums to jump.

Long-term care insurance has its perks
There are tax benefits with LTC insurance. For one, the benefit payout amounts aren’t taxed. Some premiums are deductible as a medical expense if they contribute to medical expenses exceeding 7.5% of your adjusted gross income. As you get older, the deductible amount of the premiums increases.

You can purchase traditional LTC insurance or hybrid LTC insurance. With the latter, the LTC benefit is part of a life insurance policy or annuity. The benefit is always paid, and premiums are guaranteed. If the LTC insurance coverage is not used, it is transferred as a death benefit or cash value if it is an annuity.

It's also more expensive, easily over $1,000 per month, depending on the bells and whistles.

According to Vanguard, you would benefit from LTC insurance if:

• You can afford the premiums.
• Your family or trusted friends can handle the paperwork and claims process for you.
• You crave peace of mind that comes with insurance.
• You are healthy enough to meet underwriting guidelines.

4. Determine if sharing the costs is a better option than insurance

If you're healthy, your family history is void of any chronic or debilitating illnesses or diseases and you’ve saved for your retirement, long-term care insurance might not be the best option.

Alternatively, you can share in the costs beyond what Medicare covers out of pocket. There are a few ways to do that, including an annuity and a Health Savings Account.

With an annuity, you pay an upfront lump sum and, in return, get a lifetime of regular payments which you can use for medical expenses.

How much the annuity costs depends on your life expectancy, whether you have inflation protection, and whether there is a guaranteed minimum payment amount. You can purchase an annuity to begin paying out right away or defer payments for a future date.

Qualified longevity annuity contracts (QLACs) are annuities that are purchased with money from an IRA or 401(k). These vehicles lower your required minimum distribution balances, which can help defer taxes when you have to take RMDs.

5. Max out a Health Savings Account

Many people view a Health Savings Account, or HSA, as a means of saving for health care expenses in the present, rather than the future.

But an HSA can be a tax-advantaged way to save for future medical needs. With an HSA, the money you invest can roll over year after year. There is no use-it–or-lose-it rule attached to an HSA.

HSAs are triple tax-free. You get a deduction when you contribute, they grow tax-free, and you don’t pay taxes when you withdraw them for qualifying medical expenses.

There are limitations. For 2026, the limit is $4,400 for self-only coverage and $8,750 for family coverage. If you're 55 or older, you can contribute an additional $1,000. An HSA is only available with a high-deductible health plan.

“You can invest it and let it grow so you are prepared for your health care needs,” says Scott Cutler, CEO of HealthEquity.

Don’t wait until it's too late

Declining health might not be avoidable, but it doesn’t have to leave you destitute or a burden to your loved ones. A little planning now can go a long way later.

If insurance is the route you're going, the younger you are when you take out a policy, the cheaper it is. If you plan to use investment options or savings, the sooner you start planning, the better off you'll be.

“Everyone should have a health care plan regardless of age,” says Gandhi. “A long-term plan boils down to does somebody want to inherit that risk, want to share that risk or transfer the risk completely?”

Related content

• Don't Let Health Care Costs Wreck Your Retirement: Here's How
• Average Cost of Health Care by Age
• How to Pay for Long-Term Care
• We're Retired With $4.6 Million. My Wife Chose Our Medicare Advantage Plan for the $0 Premium, But I Want Original Medicare’s Freedom. Is It Too Late?

Did you have “global pandemic” on your bingo card of possible retirement risks? The reality is that risks abound, and you can’t always see them coming.

Still, a proactive stance can help you get through them — and thrive.

Here are the top risks retirees need to be aware of and how to guard against them.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

1. Outliving your savings

Americans are living longer than ever. While most would welcome increased longevity, it also means you’ll need money to fund additional years of retirement. What can you do to ensure your savings last?

• Work longer. Working just a few years longer can help you save more money, while also delaying your need to tap your nest egg.
• Part-time work. Instead of leaving work behind completely, consider taking a part-time job to bring in some income so your money can continue to grow.
• Delay Social Security. If your health is good and you have other income sources now, you can get a significantly bigger paycheck by waiting on Social Security.
• Consider an annuity. A lifetime income annuity provides you with a guaranteed source of income you can’t outlive.

2. Encountering sequence of returns risk

Your chances of running out of money are much less if you retire during a booming market and your portfolio is up. But what happens if you retire during a market decline? It’s a little-known phenomenon known as sequence of returns risk.

Making withdrawals from your portfolio when it’s down forces you to sell more investments to come up with the amount you need. Not only does that drain your portfolio faster, but it leaves you with fewer assets with which to participate in an eventual rebound.

A wealth adviser can work with you in the years leading up to retirement to create a pool of money for your immediate cash needs so you won’t need to make withdrawals if the market is down.

The chart below illustrates what can happen to a hypothetical portfolio based on different returns at different points in time.

3. Rising health and medical expenses

Health care is one of the biggest retirement expenses, but many people overlook it when planning for retirement.

Health care costs are expected to rise about 7.5% in 2025, a near-record trend that is driven by inflationary pressure, prescription drug spending and behavioral health utilization.

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To ensure that health care costs don’t overwhelm your retirement, pay attention to these things:

• Health savings accounts (HSAs). You can build up an account for health-related expenses by saving in tax-advantaged HSAs in the years before retirement.
• Health insurance. If you retire before age 65, you’ll need to line up health insurance coverage. Some options to consider: COBRA through your previous employer, a health exchange plan or a high-deductible plan paired with an HSA.
• Medicare. Medicare won’t cover all your health care expenses in retirement. In addition to Medicare, which covers some doctors’ visits and hospital stays, you’ll want to purchase supplemental plans to pay for out-of-pocket costs.
• Long-term care insurance. The possibility of needing long-term care is higher than you might think. Long-term care insurance can pay for care when you’re no longer able to care for yourself. The earlier you buy it, the more affordable the premiums will be.

4. Letting inflation erode your purchasing power

It may seem harmless in small doses, but over time, inflation can erode your purchasing power. Think of it as a silent thief stealing the value of your money. While Social Security has automatic cost-of-living adjustments each year, it’s up to you to make sure the rest of your money keeps up with inflation. These strategies might help:

• Invest for growth. Over time, stocks have shown the ability to outpace inflation. Even in retirement, it’s important to keep some of your portfolio invested in stocks.
• Inflation-proof your investments. Consider inflation in the context of your investment selection and work with your financial adviser to adjust based on your situation.
• Explore annuities. Some annuities come with payments that increase with inflation, providing a steady income stream that retains its purchasing power over time.

Retirement is an exciting chapter in life, offering countless opportunities for personal fulfillment and quality time with loved ones.

However, concerns about financial security can create anxiety and keep you up at night.

The good news is that with a little bit of planning, you can pave the way for a smooth transition into retirement.

Related Content

• Phased Retirement: Why Easing Into Retirement Might Be Your Best Move
• Delay Social Security Benefits — Even by a Month — to Boost Your Check
• Average Cost of Health Care by Age
• How to Help Shield Your Retirement From Inflation
• Three Essential Estate Planning Steps to Protect Your Nest Egg

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Few people want to talk about the end of their life, but it’s an issue that many of us will have to manage. The average American lives seven years longer today than 60 years ago.

However, the trade-off is potentially living more years in poor health. Today, someone turning 65 has close to a 70% chance of needing long-term care services.

While planning for a potential nursing home stay is not as exciting as mapping out your next family vacation, health care expenses need to be included in a financial plan, and they’re not cheap.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

Long-term care is expensive

From home health care to nursing homes, costs can quickly add up. Monthly expenses can range from $6,000 to $11,000, and people tend to stay in assisted living or nursing homes for prolonged periods — the average nursing home stay is 485 days.

The average 65-year-old may need $165,000 to cover health care expenses in retirement.

What’s more, costs will increase with inflation, which is currently about 3%, meaning those same health care expenses could rise to nearly $350,000 by 2050.

Medicare usually doesn’t cover long-term care expenses, and Medicaid kicks in only as a last resort for extremely low-income families.

If you don’t plan, you are likely on the hook for the entirety of the expenses. Medical debt also doesn’t disappear when you pass away.

The remaining debt will be taken out of your estate, and if that isn’t enough, in some cases, it could leave your family liable for the remaining bill. Simply put, a durable financial plan must include how to pay the bills for long-term care.

Managing the cost

Self-insurance. With proper planning, there are solutions to help mitigate the costs. If you’ve saved enough money, you may be able to self-insure and cover the expenses out of pocket. Think of this as covering the costs “dollar for dollar.”

Taxes are the biggest thing you should keep in mind if you choose to pay for expenses out of pocket. If you suddenly need $50,000 to pay for a nursing home and withdraw it from a tax-deferred account, that adds to your taxable income and could lead to a hefty bill come tax season.

A way to circumvent this is to strategically convert portions of your tax-deferred assets to a Roth account ahead of time, or withdraw smaller amounts each year and save them in accessible accounts for when you need them.

Asset-based long-term care. Another option is to self-insure through asset-based long-term care. This is where the self-insuring strategy is amplified and you are able to self-insure for “pennies on the dollar.”

The two main vehicles for self-insuring through asset-based long-term care are an annuity or a life insurance policy.

The fixed-annuity option allows you to allocate a portion of after-tax dollars into a contract that will grow at a fixed interest rate. Should you need long-term care, the value of what the contract has grown to will be multiplied by either two or three times.

So for example, a $50,000 contract could provide up to $150,000 of coverage for these long-term care expenses. The nice part about a strategy like this is if you don’t need the care, you don’t lose the money. You just had the allocated dollars growing at a fixed rate in an account with no downside risk.

A life insurance policy operates similarly. Premiums can be paid monthly or in a lump sum, and the account grows in interest from the premiums paid. While traditional life insurance is reserved for your loved ones after you die, this option can cover long-term care while you’re alive.

Just like an annuity, if you don’t need long-term care, the tax-free death benefit is paid out to your loved ones much like traditional life insurance.

Using asset-based long-term care is like moving money from the right pocket to the left pocket. The asset remains yours and continues to grow at a determined rate while providing leverage in the event you need long-term care.

Long-term care insurance. While self-insuring has many benefits, it can require a larger portfolio and may not be an option for everyone. If that’s the case, you may need to look into a traditional long-term care insurance policy.

A traditional policy operates like health and life insurance: you pay a regular premium for coverage up to a set amount should you require long-term care in a nursing home or home health care. That total typically grows at a set rate per year to keep up with inflation.

Right now, annual premiums for a $165,000 initial pool will cost a 55-year-old couple $2,000 to $8,000, depending on how fast the pool grows each year.

Long-term care insurance requires you to pass medical underwriting, and pre-existing conditions, such as cancer or early symptoms of Alzheimer’s, may prevent you from being insurable.

This option is also a use-it-or-lose-it proposition. While the previous two options keep your money in your portfolio even if you don’t need long-term care, this functions like health insurance — the premiums leave your hands every month.

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If you never need coverage, the money is lost. We view this as a last-resort option if self-insurance is not for you.

Start planning as early as possible

Long-term care is not a fun topic, but it’s something many of us will need to proactively consider.

From asset-based coverage to traditional long-term care insurance, there are options that will protect you and your loved ones. But start planning as early as possible.

I recommend starting the process before you turn 60. Rather than ignoring the possibility of ill health in old age, work with a financial adviser to create a financial plan that prepares you for your golden years, whatever they bring.

The commentary on Kiplinger.com reflects the personal opinions, viewpoints and analyses of the author, Matthew Eilers, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security, or any security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Foundations deems reliable any statistical data or information obtained from or prepared by third party sources that is included in any commentary, but in no way guarantees its accuracy or completeness.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Retirement is a time to relax, enjoy the fruits of your hard work and pursue the activities you've always dreamed of. But as you approach this milestone, it's natural to wonder: "Will I run out of money?"

Uncertainty surrounding finances can be one of the biggest concerns for those nearing or already in retirement. Still, the good news is that you can significantly reduce the risk of running out of money with proper planning and a few key strategies.

This article is written by William Thatcher, founder and president of Thatcher Wealth Management. William's goal is to help his clients create successful retirement plans tailored to their specific needs.

Let's get into it by addressing your concerns with practical steps to help you retire comfortably.

1. Understand your retirement needs

Before all else, you must understand how much money you'll need to live comfortably in retirement. Everyone's retirement lifestyle is different.

Some people plan to travel the world, while others prefer to stay home and engage in hobbies or spend time with family.

A good rule of thumb is that you'll need about 70% to 80% of your pre-retirement income to maintain your current standard of living.

However, this is a general guideline. Your specific needs may vary depending on personal circumstances, such as health, family situation and retirement plans.

2. Estimate your retirement expenses

Take time to estimate your future expenses. Here's a list of categories to consider:

• Housing. Will you continue living in your current home or downsize? Factor in potential costs for maintenance, taxes and insurance.
• Health care. Medical expenses often increase as we age. Make sure you have a plan for health insurance and long-term care if needed.
• Daily living expenses. Consider groceries, utilities, entertainment and transportation. Some of these expenses go down once you're retired, but others may rise.
• Debt payments. Ideally, you'll be debt-free by the time you retire, but if you still have a mortgage or loans, these need to be accounted for.

3. Create a retirement budget

A solid budget is the foundation for managing your money in retirement. Once you've estimated your expenses, compare them to your expected income sources. Income can include Social Security, pensions, annuities, distributions from retirement accounts and any savings you've accumulated.

If you expect a gap between income and expenses, now is the time to act. You might need to adjust your spending habits, delay retirement for a few years or work with a financial adviser to explore strategies, such as converting assets into income. For most, it means selling off parts of your IRA to create income, but other options include selling off stocks, real estate or precious metals.

4. Diversify your investments

Diversification is a key strategy to help minimize the risk of losing money in retirement. Make sure your portfolio includes a mix of stocks and other non-correlated investment types to weather the ups and downs of the market.

While some might advise moving to more conservative investments as you approach retirement, it's essential to keep some growth-oriented investments to outpace inflation over the long haul.

Consulting a financial adviser to create custom plans, including a well-diversified portfolio, helps protect against market volatility and provide a steady stream of income.

5. Factor in inflation

Inflation is a silent threat to your retirement savings. Over time, the cost of goods and services tends to rise. For example, if inflation averages 3% per year, the price of a $100 item today will be $242 in 30 years.

To protect yourself from inflation's impact, it's essential to factor it into your long-term financial plan and consider investments that historically outpace inflation, such as stocks or inflation-protected securities.

6. Create a withdrawal strategy

How you withdraw money from your retirement accounts is just as important as how much you save. Consider setting up a safe withdrawal strategy based on your needs.

Some retirees choose a strategy where they withdraw from their tax-deferred accounts first (like 401(k)s or IRAs), while others may use taxable accounts for more flexibility. The optimal withdrawal strategy varies depending on your tax bracket, expected income and retirement goals.

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It's also wise to separate your savings into different "buckets." For example, one bucket can hold money you plan to spend in the first five years of retirement, while another can be for longer-term needs.

This strategy helps ensure you don't have to sell investments at a loss during a market downturn.

7. Plan for health and long-term care costs

Health-related expenses are one of the top concerns for retirees. As you age, the likelihood of needing long-term care increases. While Medicare covers many health expenses, it doesn't pay for long-term care (such as nursing homes or home health care).

Look into long-term care insurance, or create a separate savings account for health care costs.

Also, don't forget about Medicare premiums and out-of-pocket expenses. Make sure to plan for these when estimating your future health care costs.

8. Build a buffer emergency fund

Even with the best planning, unexpected expenses can arise.

To protect yourself, it's a good idea to have a "buffer fund," or emergency savings account. This will cover sudden costs, like a major home repair or a health emergency, without forcing you to dip into your long-term retirement savings.

9. Review and adjust your plan regularly

This may be the biggest tip of all: Retirement planning isn't a one-time event. As your circumstances change — whether it's health issues, unexpected expenses or changes in your investment performance — it's essential to review your plan regularly.

Schedule yearly reviews with a financial adviser to ensure your strategy is still on track.

Conclusion: If prepared, you can feel confident

The stress of running out of money in retirement is common, but with some of these steps, you can take control of your financial future. By understanding your expenses, creating a solid budget and diversifying your investments, you can build a plan that provides confidence for your golden years.

With the right planning and preparation, retirement can be fulfilling and stress-free. So, take the time to develop a strategy, and remember — it's never too early to start planning.

Even if you're close to retirement, it's not too late to make adjustments that will help you enjoy the retirement you've worked so hard for.

This article is meant to be general and is not investment or financial advice or a recommendation of any kind. Please consult your financial adviser before making financial decisions. For more detailed information, contact a financial adviser with Thatcher Wealth Management, offering investment advisory products and services through AE Wealth Management LLC. Diversification and asset allocation are investment strategies that can help manage risk within your portfolio, but they do not guarantee profits or protect against loss in declining markets.

Insurance products are offered through the insurance business Thatcher Wealth Management. Thatcher Wealth Management is also an Investment Advisory practice that offers products and services through AE Wealth Management LLC (AEWM), a Registered Investment Adviser. AEWM does not offer insurance products. The insurance products offered by Thatcher Wealth Management are not subject to Investment Advisor requirements. 3016005-5/25

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

When you are in the throes of estate planning, holding wealth in trust for the next generation is a natural impulse. But it's a good idea to pause and consider how much you should pass on as an inheritance during your lifetime, especially given the amount of wealth older Americans currently have. In the next 20 years, an estimated $84 trillion will change hands as baby boomers pass wealth on to younger generations.

Indeed, many older Americans are not planning to leave an inheritance. A recent Northwestern Mutual survey found that only 22% of baby boomers intend to leave an inheritance behind. A good 55% say they specifically do not intend to leave an inheritance, while 23% say they aren't sure what they want to do with their money.

On the flipside, only 25% of Americans across all generations expect to receive an inheritance, while 10% say they've inherited assets but don't expect any more. This indicates that families may be having open conversations about inheritances so everyone gets on the same page.

You may be planning to leave money to your loved ones if you have the means to do so. But a growing number of Americans have been embracing the "Die with Zero" rule — one that has them spending their money intentionally while they're still alive.

It’s an option you may want to consider, too.

It’s okay to put yourself first

The nest egg you’ve amassed for retirement is money you no doubt worked hard to save. So there’s nothing wrong with prioritizing your own needs, says Theresa Marx, Director of Wealth Planning and Senior Wealth Strategist at CIBC Private Wealth Management.

Marx commonly tells clients that there are three ways to use their money in retirement — “yourself, your loved ones, and your community.”

"We always tell clients, ‘focus on yourself first,’" Marx says. "We want to make sure clients have enough money to live the lives they want to live."

Of course, predicting life expectancy can be challenging without a crystal ball.

As CFP Mary Clements Evans, Financial Advisor and Owner at Evans Wealth Strategies, says, “I find that almost every one of my clients would love to manage their investments so that the last check bounces. My humorous response is, ‘If you can get God to tell me your expiration date, I’ll be happy to do that.’”

But Evans insists that clients must prioritize their own needs, especially given the potential for large healthcare expenses to arise later in retirement.

“The only thing worse than being old and sick is being old, sick and poor,” she insists.

An estimated 70% of U.S. adults who survive to age 65 are expected to need some type of long-term care in their lifetime. Genworth's most recent cost of care survey found that a private nursing home room now has an average annual price tag of $127,750 on a national level. Assisted living isn't much of a bargain, either, with an average yearly cost of $70,800.

Like Evans, Marx says that retirees have to consider their own longevity and healthcare needs — so holding onto wealth isn't necessarily selfish.

Sharing the wealth versus leaving wealth behind

Both Marx and Evans are also noticing a trend of retirees sharing their wealth with loved ones rather than focusing on plans to pass it down. Marx sees many people helping to fund their grandchildren’s education, while others aim to offer financial support to adult children as they can.

“Some people think, ‘My kids need help now, and I want to see how they do,’” Marx says. She explains that many of her clients’ grown children need financial support when they’re juggling childcare and college expenses — things her clients are often around to witness.

She says it’s best to think about when your family members can benefit from your money the most. If you live until your 90s and your grown children inherit your money in their 60s, at that point, they may be retired with access to Social Security and savings of their own — to the point where your money is nice to have, but not as crucial.

Evans also strongly believes that there are benefits to sharing assets during one's lifetime rather than leaving them behind in inheritance form.

“A [good] reason to transfer assets now is to see your family members benefit from the assets you’ve acquired,” she says. “It can also provide a great opportunity to teach your family members how to handle and invest money. I believe that’s one of the greatest gifts you can give someone.”

Evans is also seeing a large increase in the number of retirees who are treating their loved ones to big family vacations.

“They’re not just going to the beach. They’re going to Italy and Greece,” she says. “After they do it once, the experience is so rewarding they always want to do it again and again.”

The reality is that leaving money behind in inheritance form means you don’t get to see with your own eyes how it’s being spent and enjoyed. Spending your money in your lifetime on shared experiences means you may be leaving your heirs with less money. But, as Evans says,

“You get to leave memories.”

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Social Security is one of the richest pensions ever created. Unfortunately, it is also extremely complicated. It’s governed by over 2,700 rules, and most couples have over 500 potential filing scenarios.

As a result, over 90% of Social Security recipients receive less money than they are eligible to receive.

In general, high-net-worth (HNW) people have not paid much attention to Social Security because it's a small component of their overall financial position, and they do not rely on Social Security for income purposes in retirement.

Furthermore, their sense is that if Social Security doesn’t pay that much, then why bother doing a deep analysis regarding what an optimal filing strategy should be?

For the HNW, the best “traditional” filing strategies do not typically translate into “optimal” filing strategies for them. HNW people have different needs and tax situations to consider.

Furthermore, it is not necessarily clear to them which Social Security filing strategies would best fit into their income tax and estate tax plans.

Surprisingly, Social Security provides greater benefits than most people realize. HNW couples will typically receive combined benefits exceeding $2 million over a 20-year retirement. They can often receive annual benefits exceeding $100,000 per year.

Social Security is also a guaranteed pension, and it is paid out as a monthly benefit for life, with cost-of-living adjustments (COLAs) applied in January of each year.

Since it is taxed as “provisional income,” Social Security is taxed more favorably when compared to other financial assets that generate ordinary income. In most cases, Social Security is also 100% exempt from state income taxes.

Why HNW people need to think differently

When HNW people seek advice regarding the best time to file for Social Security benefits, what they are typically told by their wealth managers, CPAs, tax attorneys and smart friends is to delay taking their Social Security as long as possible, specifically to age 70, to maximize their benefit amount.

Each year that they delay the start of their benefits, their amount increases at the rate of about 8%, until age 70. Therefore, for example, their benefit at 70 is guaranteed to be 32% higher than it would have been had they filed at 66.

In addition, since up to 85% of Social Security benefits are subject to federal income tax, why not defer the tax by delaying to age 70 to file for benefits?

For the HNW, however, it’s important to think of Social Security differently.

For example, although Social Security provides a guaranteed lifetime income stream, it actually provides a guaranteed “potential” lifetime income stream, since no one knows how long they are going to live and therefore how many checks they're going to receive.

If an HNW couple is expecting to receive $2 million or more in combined Social Security benefits over a 20-year retirement, but happen to pass away unexpectedly before collecting any benefits, then Social Security will keep the entire $2 million that they would have otherwise collected.

Given that, what is the “optimal” Social Security filing strategy for the HNW? To answer that question, we first have to determine “what's the smartest and best use of their Social Security benefits”?

Estate taxes and Social Security

Often, the biggest financial issue for HNW people is not income taxes but estate taxes. With the estate tax exemption in 2025 at $27.98 million for a married couple, any married couple is subject to a 40% estate tax on every dollar of their net worth above $27.98 million (or $13.99 million for single people).

One powerful Social Security filing strategy to address the estate tax issue is to leverage the value of your benefits to help pay estate taxes. For example, let’s assume a couple could receive a combined benefit of, say, $85,000 per year if they delayed filing for their benefits until age 70.

What if instead of waiting to file at age 70, this couple filed for a reduced benefit amount at age 66 and received combined benefits of, say, $65,000 a year before tax or $40,000 after tax.

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By filing early, they could then gift that $40,000 a year in after-tax benefits into an irrevocable life insurance trust (ILIT) and fund an estimated $2 million life insurance policy to be held inside that ILIT.

What they would be essentially doing is “capitalizing” (turning an income stream into an asset) the potential Social Security income stream into a guaranteed $2 million income and estate tax asset.

That life insurance can then be used to pay for estate taxes or serve as a financial legacy for children, grandchildren or perhaps for charity.

Even if they received only one check from Social Security and passed away, under this strategy, they would instantly create a $2 million death benefit payment into the ILIT.

Long-term care and Social Security

Another consideration would be to use Social Security benefits to fund long-term care insurance. LTC insurance policies can vary in design. You could use Social Security benefits to pay for premiums on a traditional LTC policy or acquire a life insurance policy with an LTC rider.

With the latter, you can use the death benefit amount (instead of just the cash value in the policy) to provide tax-free dollars to pay for LTC expenses or as a death benefit if you do not end up having an LTC event.

Since long-term care costs are not covered by health insurance plans or Medicare, you must either self-insure or acquire LTC insurance.

By leveraging the value of your Social Security benefits to fund an LTC insurance policy, or a life insurance policy with an LTC rider, you will have created a tax-free pool of money that you can draw down on to help pay for long-term care expenses.

This will allow you to avoid having to take distributions from your retirement account assets or liquidating other assets that would then trigger significant taxes.

Even for HNW people, LTC costs could be covered on a more tax-efficient basis by acquiring LTC insurance funded by Social Security benefits.

A valuable financial asset

In summary, although HNW people do not “need” Social Security, it remains a valuable financial asset that should be examined more closely. Consideration should be given to alternative filing strategies, other than simply deferring the start of benefits to age 70 to avoid current federal income taxes.

Leveraging the value of Social Security, by integrating life insurance or LTC insurance into their planning process, could turn this otherwise neglected financial asset into a valuable income and estate tax-free asset designed to strengthen their overall retirement and estate tax plan.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Retirement: It's that time when you should be able to kick back, relax and finally enjoy the fruits of your hard work. But let's be honest — one of the biggest worries retirees face is the rising cost of health care. Medical expenses aren’t slowing down, and if you’re not prepared, they can hit you like a ton of bricks.

Take David and Linda, for example. They're a couple in their early 60s who worked hard and saved well. They felt confident about their retirement plan — until health care costs started to feel like a dark cloud hanging over their heads. Sure, they knew Medicare would help, but what about all those gaps and extra costs no one really talks about?

The truth is, health care costs can sneak up on you. According to Fidelity Investments, a 65-year-old couple retiring today can expect to spend over $300,000 on their combined health care throughout retirement — and that doesn’t even include long-term care.

When David and Linda heard that number, they knew they had to get serious about planning.

They started by taking a closer look at their health. David had a history of high blood pressure, and Linda had been managing type 2 diabetes for years. On top of that, their family medical histories revealed more risks — heart disease for David and arthritis for Linda.

Recognizing these potential concerns gave them some clarity. If they wanted to protect their financial future, they needed to prepare for medical costs beyond the basics.

Looking at Medicare

Medicare seemed like the next big puzzle to solve. David dove into the research and quickly realized there was more to it than he expected.

Medicare Part A would cover hospital stays, while Part B handled outpatient services and preventive care. Part D was crucial, too, helping to manage the cost of prescription drugs.

But the gaps — those hidden expenses that Medicare doesn’t cover — were still concerning. After weighing their options, David and Linda chose a Medigap policy to help fill those gaps. It wasn’t the easiest decision, but knowing their out-of-pocket costs would be manageable helped give them peace of mind.

Even with that coverage, they knew surprises could still pop up. So, they decided to build a dedicated health care fund. Thankfully, they had been contributing to a health savings account (HSA) for years, giving them a nice tax-free pool of money to use for qualified medical expenses.

To stay ahead of inflation and rising health care costs, they shifted part of their investment portfolio toward growth-oriented assets as well.

One concern that kept nagging at them was the cost of long-term care. A close family friend had recently faced staggering nursing home expenses, and David and Linda didn’t want to end up in the same situation.

After exploring their options, they chose a hybrid life insurance policy with a long-term care rider. This gave them the reassurance that their savings wouldn’t be wiped out if they needed extended care.

Considering prescription drug costs

Prescription drug costs were another area they tackled. They learned that switching to generic medications whenever possible can save a bundle.

They also started using tools like GoodRx to compare prices and make sure they were getting the best deals.

To stay on top of things, they reviewed their Medicare Part D plan every year to ensure their medications were still covered in the most cost-effective way.

Beyond financial planning, David and Linda realized they needed to prioritize their health to avoid bigger medical costs later on. They committed to regular checkups, screenings and vaccinations to catch potential issues early.

They also made lifestyle changes — morning walks, healthier meals and more active social lives. Surprisingly, these changes didn’t just improve their health — they also deepened their connection with each other and their community.

Feeling more confident but still wanting to make sure everything was buttoned up, David and Linda met with their financial adviser. Together, they mapped out a tax-efficient withdrawal strategy, aligned their retirement income with projected health care costs and made smart decisions about when to take Social Security.

With those final pieces in place, they knew they were ready.

Planning pays off

In the end, their preparation paid off. David and Linda entered retirement with confidence instead of anxiety. With a solid plan in place to handle health care costs, they were free to focus on what truly mattered to them: spending time with their family, traveling and embracing the retirement they had always dreamed of.

Planning for health care in retirement may seem overwhelming, but taking the time to prepare can offer incredible peace of mind. By assessing your health care needs, maximizing your Medicare benefits and building a dedicated savings strategy, you can better ensure your retirement is both secure and enjoyable.

The key is to start early, stay informed and remain proactive in managing your health care expenses.

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The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Having a loved one diagnosed with Alzheimer’s can feel devastating and overwhelming, and it profoundly impacts the individual’s financial stability, as well as their family and caregivers.

As a wealth manager, I have seen firsthand how a diagnosis creates an immediate need for financial reorganization, strategic long-term planning and legal safeguards.

With Alzheimer’s affecting nearly 7 million Americans — a number projected to almost double by 2050 — proactive planning is critical for families navigating this complex challenge.

The cost of Alzheimer's care: A stark reality

One of the first questions families ask is, "How much will this cost?"

According to the Genworth Cost of Care Survey, median annual expenses for long-term care in 2024 include:

• Home care. $6,483 per month, or $34/hour for a non-medical home health aide
• Assisted living. $5,900 per month
• Nursing home (semiprivate room). $9,277 per month

These figures can be significantly higher in high-cost-of-living areas like Washington, D.C., New York and California.

Individuals with Alzheimer’s typically live from four to eight years post-diagnosis.

“The total lifetime cost of care for a patient with dementia is estimated at $412,936 in 2022 dollars, with 70% of those costs borne by the family caregivers in the form of unpaid caregiving and out-of-pocket expenses for items ranging from home health support to medications,” according to an article by Anita Pothen Skaria in the American Journal of Managed Care (AJMC).

Funding care: Where to start

Most families use a combination of personal savings, insurance, government benefits and community resources to pay for care. Key funding sources to evaluate include:

• Personal assets and investments. Liquidating or restructuring investments, real estate holdings and other assets can help fund care. However, tax implications and estate planning consequences must be considered.
• Long-term care insurance. If a policy is in place, early review is crucial. Some policies cover home care, while others may apply only to nursing homes or assisted living communities.
• Veterans benefits. If the individual is a veteran, VA Aid and Attendance benefits may provide some home care and assisted living assistance.

Financial safeguards: Protecting against exploitation

A major concern with Alzheimer’s is financial vulnerability. As cognitive decline progresses, individuals may mismanage funds or fall prey to fraud.

Spouses and loved ones should be vigilant for warning signs, such as unpaid bills, large withdrawals, forgetting account logins or increased contact from "helpful" strangers.

To protect against financial exploitation, consider these essential steps:

• Establish a financial power of attorney (POA). Ensure that a trusted individual can manage accounts and make financial decisions before cognitive decline progresses.
• Set up account oversight. Assign a CPA, daily money manager or financial adviser to receive duplicate bank and investment statements to monitor transactions for unusual activity.
• Consolidate accounts. Reducing the number of accounts can simplify management and minimize opportunities for financial mistakes.
• Implement multilayered security. Enable two-factor authentication on banking and investment platforms and limit online access when appropriate.

Considering senior living options

For couples where one partner has Alzheimer’s, choosing the right living arrangement depends on the progression of the disease and the family's preferences.

In the early stages, aging in place with in-home care may be a suitable option, allowing the individual to remain in a familiar environment with added support.

As the disease advances, memory care communities offer specialized care tailored to dementia patients, providing a secure and structured setting.

Life plan communities provide a seamless transition from independent living to memory care to skilled nursing care, ensuring long-term stability as needs evolve.

For those who wish to remain at home but require around-the-clock assistance, live-in caregivers or private nursing services may be a viable alternative. These services offer personalized, 24/7 care in a comfortable and familiar setting.

Legal considerations: Planning for incapacity

Legal documents should be updated as soon as possible post-diagnosis. Elder law attorneys can assist family members draft essential documents while the individual still has the capacity to make decisions.

These documents include:

• Durable power of attorney (POA). Authorizes financial decision-making in the event of incapacity.
• Health care proxy and advance directives. Designate a trusted person to make medical decisions and outline care preferences.
• Revocable trusts. Help avoid probate and provide structured asset distribution upon death.
• Guardianship and conservatorship planning. If no POA is in place and cognitive decline is advanced, court-appointed guardianship may be necessary — a costly and time-consuming process best avoided through early planning.

Estate planning and wealth transfer strategies

Given the progressive nature of Alzheimer’s, reviewing estate planning and wealth transfer strategies should be a top priority.

Families may benefit from implementing gifting strategies early, transferring assets sooner rather than later to optimize tax efficiency and minimize estate complexities.

Charitable giving can also play a key role, with donor-advised funds or charitable trusts structured to provide tax advantages while supporting meaningful causes.

Additionally, for those who own a business, early succession planning is essential to ensure a smooth transfer of leadership and assets, protecting both the enterprise and the financial well-being of the family.

Final thoughts

Alzheimer’s presents a unique financial planning challenge that requires proactive, strategic decision-making. By addressing care costs, protecting assets, implementing legal safeguards and preparing for future transitions, families can better manage the financial and emotional toll of the disease.

Preserving wealth while ensuring quality care requires early intervention and collaboration with experienced financial professionals.

If Alzheimer’s has touched your family, now is the time to plan — before the window of opportunity closes.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Across the United States, millions of people are caring for elderly and disabled relatives. Estimates of exactly how many caregivers there are vary, with the Bureau of Labor Statistics reporting 37.1 million people offer unpaid eldercare, while Johns Hopkins estimated the number at closer to 24.1 million in 2022, up from 18.2 million in 2011.

Regardless of the specific number, these caregivers are devoting many hours — an estimated 36 billion of them per year — to helping loved ones cope with the effects of aging, as well as with serious conditions ranging from dementia to mobility issues and beyond. Many of these caregivers are still working themselves, have children under 18 at home, and are compromising their own retirement security to offer aid.

Many also need help — and they are clear on what kind. In fact, researchers from the University of Massachusetts, Boston, and the Center for Retirement Research recently conducted focus groups to ask what would most improve their lives, and several policies received broad support among the caregiving community.

Direct payments for caregiving

Direct payments to family care providers was the number one policy caregivers said would be beneficial. In total, 44% of focus group respondents said being paid for their services would be the most helpful policy change for them.

Black and Hispanic caregivers were especially likely to favor direct payments, in part because they are often younger and devote an average of 60 hours monthly to caregiving, which impacts their ability to work. Still, direct payments were broadly supported. “We don’t have unlimited funds,” one focus-group participant said. “While mom was sick, it would’ve helped.”

While USA.gov indicates some caregivers are eligible for direct payments through Medicaid or long-term care insurance, most caregivers don't qualify, as Medicaid is a means-tested benefit with narrow eligibility requirements, and only 3.3% of Americans have long-term care insurance.

If payments were offered to all caregivers, researchers estimate they'd add up to $76,000 over seven years (the average time spent caregiving). While this is a bargain compared to nursing home care, which averages $104,025 annually for a semi-private room, Medicare almost never covers nursing home care. Paying caregivers would be a significant new expense for the government, which is unlikely to receive support with the current focus on cutting costs.

Still, without direct payments, society will continue to rely on unpaid caregivers to make great sacrifices, both personally and financially. "Family caregivers are a scarce resource and should be protected and supported,” Susan Reinhard, the AARP senior vice president, said in an AARP article. “If they walked off the job, we’d be $600 billion short.”

Reimbursing caregiving costs

Financial concerns are a prime focus for caregivers, as the second most popular policy was reimbursement for the direct cost of caregiving. A total of 24% of focus group respondents said this would make a notable difference, with most reporting they'd like reimbursement for home modifications such as ramps as well as assistive devices like wheelchairs.

Angie's List estimates making a home wheelchair accessible can cost $2,000 to $75,000, depending on the types of upgrades. Unfortunately, Medicare often doesn't cover the costs, although it will pay for durable medical equipment like wheelchairs. Private insurance policies generally don't either. Some Medicaid programs do offer home modification waivers that pay for recommended modifications, but again, eligibility is strictly limited.

Unfortunately, for those who don't qualify for financial assistance, caregivers are left choosing between making their lives harder by offering support in a home that is not accessible, or paying out-of-pocket for the necessary modifications, which can further strain their finances.

Paid respite care

Finally, paid respite care was another popular policy, which 12% of caregivers said would be the most important change for them.

"It’d be very nice to have the time not to worry about being here … so I could go and do what I want," one caregiver said. Unfortunately, not being able to take breaks adds to caregiver stress, worsening the emotional strain and increasing loneliness.

The National Respite Network and Recess Center recommends that caregivers who need this type of support reach out to their State Respite Coalition or Lifespan Respite Program for advice on both programs and their area, as well as funding for respite care services.

Unfortunately, many caregivers simply don't have access to anyone who can provide them with time off, as their state provides few or no resources. Others are afraid to leave loved ones with low-paid providers who they fear may not be fully qualified to provide the necessary assistance.

Will caregivers get the help they need?

Unfortunately, all of the policies caregivers desire most would come at a substantial financial cost. As a result, caregivers are unlikely to see their desired changes for the foreseeable future.

Without the support they need from the government, those providing care to loved ones are left with few options but to turn to community groups, nonprofits, or other family members to find support in shouldering the significant burden they have taken on.

Local Area Agencies on Aging can be a helpful resource for those in need, and joining a caregiver support group could also provide social connections, emotional support, and access to helpful resources that could make caregiving just a little bit easier. While these are stopgap measures, they are better than nothing, and may be the best options available for now.

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President Franklin Roosevelt famously said, “The only thing we have to fear is fear itself.” But let’s be real — he never retired.

Having passed away while still in office, he never had to worry about making his savings last for 30-plus years or what would happen if medical bills drained his bank account.

Retirement is supposed to be a time of “freedom” and “enjoyment,” and according to the 2024 Transamerica Retirement Survey, most retirees associate retirement with positive words. But 37% also cite negative ones — “health decline,” “insecurity” — and nearly a quarter say they feel anxious or depressed.

Simply put: Retirement isn’t a carefree experience for everyone. Fears about money and health loom large, compounded by the uncertainty of what the future holds.

But your retirement doesn’t have to be shadowed by anxiety. Here are the biggest financial fears retirees face — and the steps you can take to retire with confidence and fearlessly enjoy the life you’ve planned.

1. Outliving your money (longevity risk)

Imagine having to choose between death and running out of money. Surprisingly, most Americans would choose mortality. A 2024 Allianz Life survey found that two-thirds of people fear running out of money more than death itself.

That makes this the number one retirement worry: Will my savings last my entire life? And it’s not just an irrational fear. With inflation, rising health care costs and unpredictable markets, retirees could be looking at decades of needing their money to last.

The U.S. Department of Labor says the average American spends about 20 years in retirement, yet only about half of Americans have even calculated how much they need to retire.

And that’s where the stress comes in.

“If you’re feeling some stress around these issues, that’s normal,” says Bob Carroll, CPA, CFP®, CDFA®, managing director and wealth advisor at Carnegie Investment Counsel. “Fortunately, our worst fears rarely manifest themselves.”

Carroll specializes in safeguarding clients from outliving their retirement funds. “The best way to bring stress down and raise your odds of success is through thoughtful planning,” he advises. “A properly constructed plan evolves and considers various time horizons.”

Traditional retirement strategies, like the 4% spending rule, suggest a fixed annual withdrawal rate from your retirement savings. However, this approach doesn't account for market fluctuations or personal circumstances. What works in a bull market might fall apart when stocks take a dive.

That’s why retirement income planning is both an art and a science. It blends quantitative analysis with personalized judgment. Your spending needs, investment returns and even your tax situation all play a role in shaping how you withdraw your savings.

Perhaps the best way to resolve this fear is to consult a fiduciary, fee-only adviser with expertise in retirement income planning — ideally before you retire.

A fresh perspective and a dynamic withdrawal strategy can make all the difference. Think of it as a road map with guardrails: a plan that adapts to market conditions, allowing you to spend more in strong years and tighten up when times get tough, ensuring your savings last longer.

2. The elephant in the room: Long-term care

Medical expenses are one of the biggest unknowns in retirement. A 65-year-old retiring today can expect to spend an average of $165,000 in health care and medical expenses throughout retirement, according to Fidelity Investments. But that doesn’t include long-term care.

Medicare helps but does not cover assisted living costs or long-term stays in rehabilitation facilities. It covers only up to 100 days in a skilled nursing facility per benefit period, and that’s only if you meet specific requirements. After that, you’re on your own.

That’s a big problem because the national median cost for a private room in a nursing home is now $10,646 per month, according to CareScout.

And here’s the reality check: About 70% of individuals aged 65 and older will require some form of long-term care in their lifetime. Yet, most people don’t plan for it.

“Making matters worse,” says Carroll, “it’s becoming increasingly difficult to cover the risk with conventional long-term care insurance policies due to the high cost and unpredictable nature of the care needed.”

The traditional policies many people have relied on are disappearing or becoming prohibitively expensive. “A multipronged approach is often needed,” he adds. “This requires looking at the full gamut of financial assets at your disposal.”

The best approach? Start planning now — especially if you’re in your 50s or early 60s. Waiting until your late 60s or 70s means you’ll pay even higher insurance premiums or, worse, won’t qualify at all due to health conditions.

What are your options?

Consider long-term care insurance — but be really smart about it. The devil is in the details when it comes to insurance policies, and premiums could be prohibitively high. Many people opt for hybrid policies, which combine life insurance with long-term coverage. If you never need care, your beneficiaries still get a payout.

If you have a high-deductible health plan, maxing out a health savings account (HSA) is a great move. It’s triple tax-free, meaning you can use it for medical expenses in retirement without paying taxes on the withdrawals.

If insurance isn’t an option, you’ll need to self-insure using a mix of investments, savings and tax-advantaged accounts like Roth IRAs or a portion of your 401(k).

3. Stock market drops when you’re ready to start withdrawals

Markets go up and down — it’s inevitable. But when you’re retired and relying on your investments for income, downturns can feel like a direct hit to your wallet.

Worries that trade conflicts will lead to higher prices haven't helped. According to Vanguard, retirees aged 70 and older typically hold about 42% of their portfolios in stocks. That’s enough exposure to fuel growth but also enough to feel the pain when markets take a dive.

As a result, people have shifted some of their retirement savings away from tech stocks to more defensive industries like consumer goods, health care and energy.

So, why not just put your retirement savings in a bank CD and avoid the risk? Relying solely on certificates of deposit (CDs) for retirement savings may not provide sufficient growth to counteract taxes and inflation.

For example, a $500,000 investment in a CD yielding 4% annually would generate $20,000 in interest. After accounting for a 22% tax rate and 3% inflation, the real growth of your investment is minimal.

Over 20 years, as costs rise due to inflation — ​which can double prices every 24 years at a 3% rate — your purchasing power diminishes, potentially draining your savings after 18 years, while you’re in your 80s.

“There is just as much risk in being too conservative as there is in being too aggressive,” Carroll warns. “Both approaches can lead to bad outcomes.”

You can’t control inflation or market cycles, but you can control how much of your income is lost to taxes. Using tax-advantaged accounts like Roth IRAs or investing in tax-efficient assets like municipal bonds can help you preserve more of your wealth for the long haul.

“A smarter strategy is to make sure your portfolio is integrated with your financial plan so that it can deliver the necessary resources to meet your needs when needed,” Carroll explains. “If this approach is done consistently, you can reduce the downside risk associated with market volatility that inevitably rears its head periodically — like now!”

Better strategies for sustainable retirement income

A well-balanced portfolio — dividend stocks, tax-efficient bonds and CDs — can provide retirees with both stability and long-term growth. But managing withdrawals is just as important as building savings.

Some retirees, even those with substantial assets, withdraw less than 3% annually — far below the commonly recommended 4% rule. While caution is wise, excessive frugality can mean missing out on the lifestyle you worked hard for.

“Believe it or not, accessing your savings requires as much planning (if not more) as the accumulation phase,” Carroll says. “Age, timing, cash flow needs, taxes and risk tolerance all play a role.”

If resources fall short, retirees can consider downsizing or leveraging home equity for additional income. And in some cases, part-time work can provide both financial security and personal fulfillment.

Last but not least: Create an estate plan and appoint a health care proxy

A good night’s sleep is one of the most valuable things in life, and nothing helps you rest easier than knowing your financial house is in order. Life is full of unexpected events — some good, some bad — but a well-structured financial plan can keep you grounded and confident in the future.

That’s why it’s essential to establish an estate plan, including a power of attorney and an advance health care directive so that trusted individuals can make financial and medical decisions on your behalf if needed.

“One or all of these fears might be haunting you,” Carroll reminds us. “But not everything needs to be done all at once.” The key is to take that first step and build from there.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Financial planning isn’t just about making money — it’s about making smart choices at every stage of life. As a financial adviser, I’ve seen firsthand how the right decisions (and the wrong ones) can shape your future. Every decade has financial challenges, and avoiding common missteps is as important as growing your assets. Here are some of the biggest financial pitfalls to avoid in your 30s, 40s and 50s.

Your 30s: Building a strong foundation

Your 30s are often a time of career growth, major life milestones and increased financial responsibility. The decisions you make now will set the tone for decades to come. According to Ascensus, starting to save at age 25 instead of 35 can result in nearly double the retirement savings by age 65. Pitfalls to avoid:

Neglecting retirement savings

It’s tempting to put off saving for retirement while managing student loans or a mortgage, or starting a family. However, delaying contributions means missing out on compound growth. If your workplace offers a 401(k), take advantage; if they offer a company match, even better. Save at least what they are willing to match and target an overall saving of 15% to 20% of your gross paycheck.

At this age, you can still enjoy the magic of compound interest, so be sure to take advantage of that while you can.

Overspending on lifestyle upgrades

A higher income often leads to lifestyle creep — bigger homes, nicer cars and expensive vacations. While enjoying your hard-earned money is important, avoid stretching your budget too thin. Prioritize savings and investments before increasing discretionary spending and spend some time defining your goals and what they mean for you.

Relying too much on debt

Credit card debt, car loans and personal loans can add up quickly, eroding wealth-building potential. Have an aggressive plan to eliminate those loans, starting with the highest interest rates first. Consider automating your payments so you never miss one. Do your best to avoid taking on any additional debt by creating a budget that works for your lifestyle.

Your 40s: Maximizing growth and stability

Your 40s should be a time of peak earning potential, but financial missteps can now lead to long-term consequences. Use this time to take proactive steps towards your finances to make sure you’re on track to enjoy your golden years. Pitfalls to avoid:

Not increasing retirement contributions

If you started saving in your 20s and 30s, great. But as your income grows, so should your retirement contributions. If you get a raise, consider increasing your savings by the amount of your raise or most of it. This also helps prevent overspending and lifestyle creep. If your workplace 401(k) allows employees to enroll in automatic contribution increases, sign up, and your savings will automatically increase by a certain percentage (often 1%) each year.

Not protecting your assets

As you build wealth and acquire valuable assets like a home or a car, it’s crucial to help safeguard them against unexpected risks. Without appropriate property and casualty insurance, you could face significant financial losses due to accidents, natural disasters or lawsuits.

Ensure you have adequate coverage and appropriate policy limits to protect yourself. If you own a home, consider adding an umbrella policy — an extra layer of liability protection that extends beyond the limits of your auto insurance and homeowners insurance. This added coverage can help shield your assets from potential costly legal claims.

Not getting serious about having an estate plan

Many people assume estate planning is for older individuals or people with significant assets. However, unexpected events happen all the time. It’s important to have a will, power of attorney and advance health care directive. These documents will select who will be in charge and set the rules for the distribution of your assets.

They also allow you to nominate guardians for your children should something happen and allow you to choose loved ones to make financial and medical decisions on your behalf.

Your 50s: Preparing for retirement

With retirement getting closer, your 50s should be about solidifying your financial security. Here are some things that are sometimes overlooked. Pitfalls to avoid:

Underestimating healthcare costs and longevity

It’s no secret that people are living longer lives, and retirement can be more dynamic and active than it was for older generations. However, what may not come to mind right away is that we need to prepare financially for these longer lifespans and potential health-care costs, which can sometimes reach hundreds of thousands of dollars.

To help stay ahead and prepare for future medical costs, explore options like health savings accounts (HSAs), Medicare planning and long-term care insurance.

Taking on too much risk — or not enough

Some investors in their 50s take excessive risks in an attempt to “catch up” on retirement savings, while others become too conservative. A well-balanced portfolio should reflect your risk tolerance, time horizon and retirement goals.

A financial adviser can help you adjust your investment strategy accordingly. And don’t forget to rebalance your portfolio periodically, especially when there are significant market movements.

Not having a clear retirement plan

Retirement isn’t just about reaching a certain number in savings — it’s about knowing how and when to withdraw assets efficiently. Failing to plan for taxes, withdrawal strategies and Social Security optimization can leave money on the table.

According to retirement plan provider Fidelity Investments, the rule of thumb is to save 10 times your income if you want to retire by age 67 — including anything in a retirement account and investments. Work with a financial professional to create a road map for sustainable retirement income. Review your retirement plan to help make sure you’re on track for your goal date. Crunch the numbers and figure out what you’ll need to live on during retirement and assess how close you are to that number.

If you determine that you’re behind, that’s OK — there’s still plenty of time to correct. Involve your financial adviser during life milestones for guidance to help with a smooth transition.

Every decade contains different financial pitfalls. But if you’re proactive, disciplined and strategic, you can take steps to avoid them and build a financial future designed to provide security, flexibility and peace of mind. No matter where you are in your financial journey, the best time to make smart money decisions is now.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Retirement is one of the most important milestones in life — and one most people look forward to. But like any major milestone, retirement comes with challenges.

It’s not just about saving enough money or making the most from your investments (though those are typically, and legitimately, two of the most talked-about retirement topics). It’s also about planning and preparing for potential obstacles: Some you can predict, and others you might fail to see coming.

With that in mind, here are five key retirement risks, followed by actionable strategies that can help you avoid them — or at least manage them effectively.

1. Financial instability

One of the most common questions I’m asked by people who are thinking about retirement is, "How can I be sure that once my paycheck goes away, I won’t run out of money?" That’s a reasonable concern. We can’t know what the future will bring to you personally or to the world around us. But we do know a lack of planning can make you more vulnerable to market volatility, unforeseen expenses and other retirement pitfalls.

We’ve also seen, time and again, that individuals and couples often underestimate how much they’ll need to sustain their desired lifestyle in retirement.

2. Healthcare and long-term care costs

Many people I talk to in my office or at educational seminars have no idea that Medicare won’t pay for every medical expense they incur in retirement. And those costs can be a budget breaker for someone on a fixed income.

According to Fidelity Investments’ most recent Retiree Health Care Cost Estimate, a 65-year-old who retired last year can expect to spend an average of $165,000 through retirement on healthcare and medical expenses. And that doesn’t include dental or long-term care costs — both of which can put a serious dent in a retiree’s finances.

3. Taxes

Taxes can quickly erode your hard-earned nest egg, particularly if a significant portion of your withdrawals will be coming from a tax-deferred plan like a 401(k) or traditional IRA. Here’s a little secret: There’s no guarantee your tax rate will be lower in retirement than it is now, which means putting tax-efficient strategies in place before you retire is a must.

4. Inflation

We’ve all gotten a sample of what inflation can look and feel like in the past few years. But for retirees on a fixed income, it can be devastating — especially for those who are forced to withdraw more than they planned from their investment accounts, even in down periods, to cover rising costs.

5. Estate planning oversights

Without proper estate planning, retirees may struggle to pass on their assets effectively, leaving their loved ones with unnecessary legal and financial burdens. Failing to properly document your wishes with a will, trust or power of attorney can create challenges for the family members left to manage your assets or make healthcare decisions.

Putting a plan in place

Implementing a holistic plan that ensures financial readiness and adaptability is fundamental to overcoming retirement risk. And, of course, I recommend working with a financial professional to help you get it right. But whether you plan to DIY it or work with an experienced adviser, your process should include the following:

1. Education

Understanding the basics of retirement planning can empower individuals to make better decisions. No matter where you are in the planning process, make the most of financial literacy workshops (many of which are provided for free by financial professionals) and other tools available online or through your adviser.

2. Evaluation

Identifying gaps in your income plan, insurance coverage, portfolio mix, etc., can help you avoid potential problems in retirement. This is one of the most difficult — and important — steps in planning. Assessing where you are can help you understand what you need to do next to successfully achieve a comfortable lifestyle in retirement.

3. Setting goals

Establishing clear, measurable and realistic objectives is critical. Setting up a timeline that includes both short- (one to five years) and long-term goals (five years or longer), can be extremely useful. It’s also a good idea to separate your retirement needs from any aspirational or nonessential spending. This doesn’t mean you shouldn’t have some fun in retirement, but good planning requires prioritizing.

4. Creating a plan

Once you know what you want your retirement to look like, you can begin to create a detailed roadmap to reach your goals. If you haven’t already, you can set up an appropriate portfolio allocation based on your age, risk tolerance and time horizon.

You’ll also want to research tax-efficient savings strategies and how they might best suit your needs. As you build your plan, don’t forget to factor in when you (and your spouse, if you’re married) should file for Social Security benefits.

And keep in mind that unforeseen events could impact your plan, including personal emergencies, economic downturns, market volatility and periods of prolonged inflation.

5. Implementing the plan

At this point, you’ll need to transition from planning to actionable steps that include:

• Opening, closing and consolidating accounts
• Setting up automatic contributions to your retirement plans
• Building a diverse mix of taxable, tax-advantaged and tax-free accounts to grow your wealth
• Making sure your loved ones are protected if you become ill or pass away

6. Monitoring the plan

If you thought this was a one-time deal and that you could just set and forget your retirement plan, you will be disappointed. I advise monitoring your progress regularly, and that includes meeting with your financial adviser at least once a year. That way, you can adjust your plan to reflect important life events, economic conditions and changes in your priorities.

As you close in on retirement, you can take steps to shift your focus from accumulation to preservation.

You should be able to look forward to retirement with excitement and confidence — and that means creating a comprehensive plan that helps you grow and protect your money. If you aren’t sure where to start or how to make all those moving pieces work together for your benefit, don’t hesitate to tap a financial adviser who can assist you in building and managing your plan.

Kim Franke-Folstad contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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The recent devastating fires in Southern California have highlighted the critical role of insurance in protecting our lives and financial well-being. Insurance isn't just about safeguarding your home; it's a comprehensive tool that can replace lost income due to disability, provide crucial support while traveling and help manage the significant costs of long-term care. In short, insurance acts as a financial safety net, mitigating life's uncertainties.

As a financial planner, I regularly review my clients' financial plans, updating their current financial information as their lives unfold. A critical component of these regular reviews is assessing their needs not only for life insurance but also for other vital protection essential to their financial well-being, such as auto, home, disability and long-term care insurance. It's crucial to remember that our insurance needs evolve as our lives change. Whether we’re getting married, having children or approaching retirement, regularly reviewing the types and amounts of coverage is essential for a comprehensive financial plan.

Insurance offers several key benefits:

Asset protection

Insurance protects your assets against financial losses from unforeseen events such as accidents, illnesses and natural disasters. It minimizes the risk of substantial out-of-pocket expenses and can replace lost income while offering a layer of security that allows you to manage financial uncertainties with confidence.

Cost-effective risk management

While insurance premiums represent an added expense, they are a relatively small price to pay compared to the potentially devastating financial impact of a major loss. Paying regular premiums can save you from large, unexpected expenses. Insurance is a proactive approach to risk management and is crucial to maintaining your financial health.

Enhanced financial security

Beyond safeguarding your assets, insurance can provide financial security that extends beyond your current savings. For example, life insurance can offer a significant payout to beneficiaries, creating a financial safety net for loved ones. This is especially important for young families with dependents.

Bridging the gap

Long-term care costs can be exorbitant, and government assistance programs often provide limited or no coverage. Long-term care insurance can help bridge this gap, protecting your retirement savings and ensuring access to necessary care without financially burdening your family. With a long-term care plan in place, you can enjoy peace of mind knowing that your future healthcare needs are adequately covered.

Building a financial legacy

By protecting your assets and using life insurance benefits to supplement your estate, insurance can be a powerful way to extend your impact beyond your lifetime. It can help you provide for loved ones and future generations. Your legacy could include providing educational opportunities while supporting causes that are important to you and can make a lasting impact.

Unfortunately, many people think about insurance only when a premium payment is due. However, insurance is a vital tool that can facilitate a quicker and smoother recovery from a wide range of life events. It provides peace of mind, knowing that you and your family can weather unexpected challenges without facing financial ruin. Review your situation with a financial planner to assess your specific insurance needs and ensure you have the right coverage to protect your future.

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The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Healthcare planning can be one of the most important — and often overlooked — aspects of retirement preparation. With rising costs, longer life-spans and the compounding effects of inflation, financial advisers must help clients create robust plans that help secure their financial future.

Here’s a look at why this issue is pressing and some ways professionals can effectively guide clients through the challenges.

The rising tide of healthcare costs

Healthcare costs are escalating faster than many clients anticipate, posing a significant risk to retirement savings.

• A 65-year-old couple retiring today may need over $320,000 to cover healthcare expenses during their retirement — excluding long-term care, according to Fidelity Investments’ 2024 Retiree Health Care Cost Estimate.
• Data from the Kaiser Family Foundation confirms that medical costs will increase at an average annual rate of 5% from 2027 to 2032.

Financial advisers should consider addressing these figures with clients to set realistic expectations for retirement budgets and help avoid unpleasant surprises later.

Longer life-spans increase financial pressure

With advances in healthcare and improved living conditions, people are living longer than before, which is both a blessing and a challenge.

• According to the Social Security Administration, the average life expectancy for a man reaching age 65 on April 1, 2024, is 84.2 years. For women, it’s 86.8 years.
• These extra years often come with rising healthcare requirements, including increased prescription medication usage, regular treatments and chronic condition management.

For financial planners, helping clients stretch their retirement savings and account for potential medical needs in their 80s and 90s is an important part of the planning process.

The inflation factor

Inflation compounds the problem by quietly chipping away at the future purchasing power of retirement savings. Even at a modest 2% to 3% average annual inflation rate, retirees could see their healthcare spending double over the course of 20-25 years.

Moreover, healthcare inflation has historically outpaced general inflation, making it important for financial professionals to use conservative estimates when projecting future costs.

Strategies to help mitigate healthcare costs during retirement

To help clients mitigate healthcare expenses, financial professionals can take a proactive and strategic approach. Here are a few actionable steps to help guide your clients effectively:

1. Educate clients on Medicare and its gaps

Medicare is a valuable resource, but it doesn’t cover everything. Many clients — including those nearing retirement — may not fully understand the costs and limitations involved.

Medicare typically covers hospital visits, basic outpatient care and some prescriptions but excludes most long-term care and dental expenses. In many cases, it may be beneficial to encourage clients to evaluate supplemental insurance options like Medigap or Medicare Advantage to help bridge coverage gaps and cap out-of-pocket spending.

2. Encourage early long-term care planning

Long-term care is a significant but often overlooked cost in retirement. Longer life expectancies can mean additional long-term care expenses, with costs for private nursing homes exceeding $100,000 annually in many areas, according to Genworth’s 2023 Cost of Care Survey.

Consider recommending long-term care insurance or hybrid life insurance policies with long-term care riders to help protect clients’ assets.

3. Promote health savings accounts (HSAs)

For pre-retirement clients, HSAs are a tax-efficient way to help save for future medical costs.

Contributions to HSAs are tax-deductible, grow tax-free and can be withdrawn tax-free for qualified health expenses. Encouraging clients to invest aggressively in their HSAs while they are employed may help ensure they have dedicated funds available during retirement.

4. Consider guaranteed income options

Products such as annuities can provide lifetime income that offsets the steady rise in medical costs. Fixed-indexed annuities, for example, offer growth potential with protection from market downturns and can safeguard retirees’ most critical expenses.

Discuss the suitability of such products with clients based on their risk tolerance and financial goals.

5. Use tools to estimate future costs

Leverage technology to provide clients with clear, data-driven projections. Healthcare calculators or proprietary software can help estimate how inflation and life expectancy might impact costs over time. Transparency in illustrating these numbers can help guide more informed decisions.

The financial professional’s call to action

I believe planning for healthcare costs is no longer optional — it’s essential. Rising medical expenses, increasing longevity and inflation require proactive approaches to help safeguard retirement assets.

By staying informed about Medicare and other issues and educating clients through workshops, blogs or newsletters, financial professionals can help clients avoid common healthcare pitfalls such as:

• Underestimating costs
• Unexpected medical events (surgeries, accidents or chronic illnesses)
• Outliving savings

Talk to your clients today about healthcare planning and help ensure they’re on a path to a secure, confident retirement. It’s never too early to plan.

Investing involves risk, including the potential loss of principal. Any references to protection, safety or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the issuing carrier. Our firm is not affiliated with the U.S. government or any governmental agency. 2/25-4225082

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

In 2021 I decided to quit my steady, full-time, well-paid job and return to freelancing. My choice wasn’t impulsive or rash. But you wouldn’t know it from the way some people reacted — with variations on: Have you lost your mind?

Well, yes, I had.

That summer, my dad was turning 90, and every other minute he (and his equally elderly dog) needed — something. A prescription. A doctor’s appointment. A walk. A meal. Company.

At the same time, my son was about to start actual in-person high school, after missing 9th grade owing to Covid (and the lamest Zoom-schooling you can imagine). No one was prepared.

Like many caregivers trying to juggle everything, plus a demanding job — I felt that something had to give. So, with the stroke of an email I resigned, and became a statistic: one of the 37 million unpaid caregivers who watch over an adult 65 or older, according to data from the Bureau of Labor Statistics (BLS). Of those caregivers, some 22 million, or almost 60%, are women — most of whom are between the ages of 45 and 64.

Caring for someone who’s older is hard, whether you’re male or female. And clearly millions of men are also in this boat. But the long-term economic consequences for women tend to be much more severe, for many reasons. Chief among them is the financial timing of when women step into (or fall into) an eldercare role, according to a study by Samantha Brady, research specialist at the MIT AgeLab and PhD student at Brown University.

The double caregiving penalty

‘Financial timing’ may not sound alarming. But women become caregivers, on average, at around age 52 — and that’s a critical period in the lead up to retirement. As Brady notes in her study, which examines women’s employment patterns when they first transition into caregiving, it’s not that women tend to quit their jobs or cut back their hours. It’s more like they slowly lose financial ground, at the very moment when there should be a series of gains.

“What I found is that, in the transition into parental caregiving, women’s wages tend to stagnate relative to non-caregivers,” Brady said in an interview. “It may be they’re not pushing for the raise or the promotion — or they may be passed over, owing to the stigma around caregiving.

“But this transition often occurs at midlife, when a lot of women are at their peak earning years, and it can have a significant impact on their long-term financial security.”

Wouldn’t men of a similar age face a similar outcome? In some cases, male caregivers may take a financial hit. But the data doesn’t support this as a general trend among men. Just as women tend to endure a motherhood penalty in terms of lost wages and stalled career growth when they’re younger — men, if anything, get a bit of a fatherhood bonus.

“Essentially we see a double penalty for women in terms of this persistent gender pay gap — where it may hit you in motherhood, and it will hit you again if you become a parental caregiver,” Brady says.

Connecting the dots and the numbers

While the financial penalties associated with caregiving are well known — about 45% of caregivers experience some kind of financial setback, whether that’s struggling with bills or falling into debt — the broader context of a woman’s financial life is what’s most germane here.

Because, for women, the economic impact of caregiving doesn’t happen in a vacuum.

Due to the fact that women earn less than men (still), they tend to save less, and end up with about 30% less saved for retirement, according to the TIAA Institute. That’s a tough swallow, given that women tend to live three to five years longer than men do — and also need to cover the expenses of their own much-longer lives.

Also: these numbers refer to the broader population of women in the U.S. When you look at the predicament of women of color and LGBTQ+ individuals specifically, the financial strain is even greater.

What’s worse — and often left out of this conversation (I don’t know why) — is that when a woman’s income takes a hit, it’s likely her Social Security benefit will too, because that payout is based on an individual’s earning history. For example, in 2022, the average monthly Social Security check for women 65 and older was $1,638 versus $2020 for men: almost 20% less.

Until now, the discussion about this retirement gap has focused primarily on the fact that women tend to earn and save less, on average. (Women can also be more conservative investors, but that’s for another story.)

But it’s not just a matter of the old women-earn-78-cents-versus-a-dollar-for-men. Brady’s report cements a crucial point, raised by other researchers as well: that women pay a much heavier price when they become caregivers, especially at midlife — and especially when they’re caring for older adults, who often suffer from long-term chronic conditions, with few social supports.

In short, for millions of women, caregiving has become a stealth factor undermining their ability to retire and potentially their long-term financial security.

In Lieu of a Magic Wand …

It’s not easy to suggest next steps for a problem that isn’t so much one problem as it is a series of long-standing, interlinked, systemic issues. But here goes.

1. Respect the odds.

They say awareness is the first step. So if you’re a woman of a certain age, with parents of a certain age, that doesn’t guarantee that you’re on the fast-track to becoming a caregiver. But to have more control over your own financial future, it helps to open your eyes about what the odds are.

“We know that a fifth of people in the U.S. in any year are caregiving for an adult — which is huge,” Brady says. “So you might not think it's going to be you, but these shocks happen, and chances are many women will be caregivers.”

2. Start talking.

Beth Pinsker, CFP®, a columnist for MarketWatch and the author of “My Mother’s Money,” a forthcoming book about her own experiences as a caregiver, is all about breaking the silence. “We talk about the emotional burden of caregiving. We talk about the physical needs of caregiving. We talk about the mechanics of caregiving,” Pinsker says. “But we don’t really talk about what happens financially when you get thrown into a caregiving role.”

Speaking up about the insane and unpredictable nature of caregiving expenses — to friends, family, co-workers, financial professionals, anyone with a sympathetic ear — could help get you support and information that may help. Just as important, giving voice to financial stress will help other women to recognize this is not, or shouldn’t be, their burden alone.

Even if you have the resources to cover what an older loved one might need, “money is flying out the door in sums you don’t normally see in real life,” Pinsker says. Don’t shrug off those expenses, or power through hoping it will “all come out in the wash” — if that will put your security further at risk.

3. Accelerate your own financial plan.

Most people drag their feet when it comes to checking all the boxes for their financial plans (a.k.a. inertia). But women who are caregivers may want to think further ahead, or get help from a financial adviser — hire a professional who charges by the hour, if you can.

I hate to trot out the standard-issue personal finance advice to pay down or avoid debt; put money aside for an emergency; fund a retirement account — but do all that and do it sooner, because later might come with a firehose of competing priorities.

4. Keep your job.

I stand by my decision back in 2021; leaving my job was the right move at that point. But Brady says that staying employed may offer an upside for some caregivers. In addition to keeping yourself on an even keel financially, “there is evidence that keeping your ties to work is protective of your mental health.”

Even when the juggle gets overwhelming, and it may, having a place to go where you’re not a caregiver, having a network of co-workers who bring out your non-caregiver self, can be beneficial.

5. Sort out the powers that need to be.

Dealing with your own finances is complicated enough — but having to manage your parents’ money or financial plan can be mind-bending (especially if there are siblings or other family members involved).

So while you may not be able to sort out all the wills and trusts and estate plans, you can take a relatively non-controversial step “and make sure all the adults in your realm have a valid power of attorney document that you can access if you need to care for anyone,” Pinsker recommends.

Without the proper powers-of-attorney and a health care proxy, taking action when you need to can become nightmarish, and potentially expensive.

And while you’re at it, do the same for yourself. And tell a friend.

Read More

• How to Retire Early Due to Disability or Caregiving
• Five Ways to Ease Caregiver Stress
• How to Pay for Long-Term Care
• How Gen X Could Reinvent Retirement

Medicare Part A and Part B, also known as original Medicare or traditional Medicare, cover a large portion of your medical expenses after you turn 65, but that doesn't mean Medicare covers everything.

Part A (hospital insurance) helps pay for inpatient hospital stays, skilled nursing facility stays, surgery, hospice care and even some home health care. Part B (medical insurance) helps pay for doctors' visits, outpatient care, some preventive services, and some medical equipment and supplies. Most people can start signing up for Medicare three months before the month they turn 65.

It's important to understand that Medicare Part A and Part B leave some pretty significant gaps in your health care coverage; many buy Medigap policies to pick up those costs. This is why an increasing number of Medicare beneficiaries choose a Medicare Advantage plan (MA) to fill some of those gaps. However, be aware that any extras or perks could be reduced or withdrawn in a later plan year.

A private plan through Medicare Advantage, which customers generally like, can offer more benefits and lower premiums. But a 2022 report from the Office of Inspector General found that some beneficiaries of Medicare Advantage are denied necessary care.

Here's a closer look at what isn't covered by traditional Medicare, plus information about supplemental insurance policies, Medicare Advantage, and strategies that can help cover the additional costs, so you don't end up with unexpected medical bills in retirement.

1. Does Medicare cover prescription drugs?

Medicare doesn’t provide coverage for outpatient prescription drugs, but you can buy a separate Part D prescription drug policy that does, or a Medicare Advantage plan that covers both medical and drug costs. (Some retiree health-care policies cover prescription drugs, too).

You can sign up for Part D or Medicare Advantage coverage when you enroll in Medicare or when you lose other drug coverage. You can also change policies during open enrollment season each fall. Compare costs and coverage for your specific medications under either a Part D or Medicare Advantage plan by using the Medicare Plan Finder.

Married couples can pick different Part D policies and select the one that best covers their individual healthcare needs.

If you enroll in a Part D or Medicare Advantage plan for 2026, you won’t have to pay more than $2,100 in out-of-pocket costs for your medications. You will also have the option to spread out-of-pocket costs over the year rather than having to pay high out-of-pocket costs in any given month.

If you are enrolled in the Medicare Prescription Payment Program (MPPP) in 2026, you will be auto-enrolled for the next year unless you formally withdraw.

This cap on prescription drug costs applies only to medications covered by your Part D plan and does not apply to out-of-pocket spending on Medicare Part B drugs. Part B drugs include vaccinations, injections a doctor administers and some outpatient prescription drugs.

2. Routine physical exams

Annual physicals are not covered by Medicare. That may seem short-sighted, as annual physicals have typically been recommended as a preventative measure to head off bigger medical issues with early detection. Medicare does cover a Medicare Wellness Visit, also called a wellness exam. This type of visit is an assessment of your overall health and well-being.

Medicare Part B covers an annual wellness exam and many preventive screenings with no copay or deductible. However, you may have to pay a share of the cost for certain recommended tests or services. And while it’s not mandatory, there are very good  reasons to have a wellness exam every year.

During the exam, your primary care provider combines information from the visit with your medical record to assess your risk for common preventable health problems such as heart disease, cancer and type 2 diabetes. Based on what’s learned from your exam, your doctor will create a personal prevention plan with a checklist of screenings you need to have.

Medicare covers a wellness visit once every 12 months (11 full months must have passed since your last visit), and you are eligible for this benefit after you have had Part B for at least 12 months.

3. Does Medicare cover long-term care?

One of the largest potential expenses in retirement is the cost of long-term care. The median cost of a private room in a nursing home was roughly $135,528 in 2026 (according to Genworth estimates cited by SeniorLiving.org); a room in an assisted-living facility costs $75,756, and a home health aide costs $200 per day.

Medicare provides coverage for some skilled nursing services but not for custodial care, such as help with bathing, dressing and other activities of daily living. However, you can buy long-term-care insurance or a combination long-term-care and life insurance policy to cover these costs.

You can also get a long-term care rider on an annuity, which can help defray the cost of long-term care.

4. Does Medicare cover deductibles and co-pays?

Medicare Part A covers hospital stays, and Part B covers doctors’ services and outpatient care. But you’re responsible for deductibles and co-payments.

In 2026, you’ll have to pay a Part A deductible of $1,736 before coverage kicks in, and you’ll also have to pay a portion of the cost of long hospital stays — $434 per day for days 61-90 in the hospital and $868 per day after that.

Be aware: Over your lifetime, Medicare will only help pay for a total of 60 days beyond the 90-day limit, called “lifetime reserve days,” and thereafter you’ll pay the full hospital cost.

Part B typically covers 80% of doctors’ services, lab tests and x-rays, but you’ll have to pay 20% of the costs after a $283 deductible in 2026. A Medigap (Medicare supplement) policy or Medicare Advantage plan can fill in the gaps if you don’t have the supplemental coverage from a retiree health insurance policy. Medigap policies, sold by private companies, come in 10 standard versions that pay for costs that original Medicare doesn't cover.

If you buy a Medigap policy within the first six months of signing up for Medicare Part B, insurers can’t reject you or charge more because of preexisting conditions. After your initial enrollment period, insurers can use underwriting to assess your fitness for a policy and adjust your premium. See Compare Medigap Plan Benefits at Medicare.gov for more information, as well as Watch Out for the 'Medigap Trap.'

Medicare Advantage plans provide medical and drug coverage through private insurers, and many also offer supplemental benefits for vision and dental care. You can switch Medicare Advantage plans every year during open enrollment season.

5. Does Medicare cover dental care?

Medicare doesn’t provide coverage for routine dental visits, teeth cleanings, fillings, dentures, or most tooth extractions. Some Medicare Advantage plans cover basic cleanings and X-rays, but they generally have an annual coverage cap of about $1,500. You could also get coverage from a separate dental insurance policy or a dental discount plan.

An alternative way to pay is to build up money in a health savings account (HSA) before you enroll in Medicare. You take tax-free distributions for medical, dental and other out-of-pocket costs at any age. However, you can’t make contributions to an HSA after you sign up for Medicare.

6. Does Medicare cover routine vision care?

Medicare generally doesn’t cover routine eye exams or glasses (exceptions include an annual eye exam if you have diabetes or eyeglasses after having certain kinds of cataract surgery). But some Medicare Advantage plans provide vision coverage, or you may be able to buy a separate supplemental policy that provides vision care.

If you set aside money in an HSA before you enroll in Medicare, you can take tax-free distributions at any age to reimburse yourself for exams, glasses, contact lenses, prescription sunglasses and other out-of-pocket costs for vision care.

7. Does Medicare cover hearing aids?

Hearing aids are critical for maintaining a healthy brain for those with hearing loss. A recent study found that hearing aids lowered the rate of cognitive decline in older adults at high risk of dementia by almost 50%.

Medicare doesn’t cover routine hearing exams or hearing aids, which can cost from $2,000 to $4,000 per ear. However, some Medicare Advantage plans cover hearing aids and fitting exams, and some discount programs provide lower-cost hearing aids. If you save money in an HSA before you enroll in Medicare, you can use the money tax-free for hearing aids, hearing tests, and other out-of-pocket expenses.

If you have mild hearing loss, an over-the-counter hearing aid might be a good fit for you. Senior Living says these devices typically cost between $99 and $8,000 a pair. Be sure to get an audiology test before you get over-the-counter hearing aids, as Johns Hopkins recommends.

8. Does Medicare cover medical care overseas?

Medicare usually doesn’t cover care you receive while traveling outside of the U.S., except for very limited circumstances (such as on a cruise ship within six hours of a U.S. port). But some Medigap plans will cover 80% of the cost of emergency care abroad up to a certain limit.

Medicare Supplement plans C, D, F, G, M and N cover some travel-abroad emergency help. No other Medicare Supplemental plans provide foreign travel emergency coverage.

Additionally, some Medicare Advantage plans cover emergency care abroad. Or you could buy a travel insurance policy that covers some medical expenses while you’re outside of the U.S. It may even cover emergency medical evacuation, which can otherwise cost tens of thousands of dollars to transport you aboard a medical plane or helicopter.

A note about Medicare Advantage

Medicare Advantage may provide coverage for some things not covered by traditional Medicare. However, as mentioned above, a 2022 report found that some Medicare Advantage insurance providers unnecessarily denied care or payments for care that would have been provided to beneficiaries had they chosen traditional Medicare.

The Advantage insurance providers likewise “denied payments to providers for some services that met both Medicare coverage rules” and the organizations’ billing rules, according to the report. This could prevent or delay needed care for beneficiaries and could result in a burden on medical providers.

The report also found that 13% of the time that Medicare Advantage providers denied prior authorization, the requests met rules making them eligible under original Medicare, suggesting they would have been approved if the beneficiaries had not chosen Advantage instead of original Medicare.

The report concluded that in those instances, Advantage insurance providers “used clinical criteria that are not contained in Medicare coverage rules.” For example, they might require an X-ray before approving more advanced imaging. In addition, the Advantage insurance providers denied some prior authorizations for care on the basis that the requests didn’t have enough documentation to support approval.

Yet, the inspector general found, “our reviewers found that the existing beneficiary medical records were sufficient to support the medical necessity of the services.”

Often, when challenged, however, the Advantage insurance providers would reverse their decisions. So, it’s important for patients to be able to advocate for necessary coverage if denied.

Lawmakers on both sides of the aisle introduced legislation in 2023 to curb frivolous denials of care by Advantage insurers. And the Department of Health and Human Services finalized rules in April 2024 to overhaul how Medicare Advantage customers get prior approval for care.

To look up Medicare’s coverage rules and other types of care and procedures, go to Medicare.gov/coverage and use the “Is my test, item or service covered?” tool. If you believe a claim was unfairly denied, see How to Appeal a Denied Medicare Claim.

Related content

• Nine Medicare Changes to Watch in 2026
• What You Will Pay for Medicare in 2026
• Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D
• 18 Things Medicare Gives You for Free

Retirement is a phase of our lives that many look forward to. It’s a time to relax and enjoy all the hard work it’s taken to get there. However, there is a lot of retirement misinformation out there and it’s important to make sure you’ve got all the facts. Here are a few myths I have encountered while helping clients plan for their golden years.

Myth No. 1: You can’t retire until you reach age 65

One of the biggest retirement misconceptions I have seen is that you have to wait until age 65 to retire. For many years, 65 was the traditional retirement goal. But today, retirement can happen at any age, as long as you plan for it the right way. Many people may choose to work until 65, either because they need to continue building their savings or simply because they enjoy their career.

Try not to focus on your age when thinking about retirement. Focus instead on your income and whether you can fully rely on it for the rest of your life. Finding the right savings strategy for you and your family and creating a solid financial plan can help you reach your dream retirement.

Myth No. 2: I should plan for a 10-year retirement

If you’re lucky, your retirement will last many years and be filled with relaxing days and time with family and friends. But how do you plan for retirement when you’re unsure how long it will last? Americans are living much longer than they were decades ago. According to the Social Security Administration, the average life expectancy for a man reaching age 65 on April 1, 2024, is 84.2. For women, it’s 86.8. Many people could live past those ages, into their 90s or even 100s. This means that if you retire at age 60 and live to 100, you could have a 40-year retirement. That could be as long as your career was!

While it would be much easier to plan if we knew exactly how long we were going to live, it doesn’t work like that. When planning for your retirement, it is always good to plan for too much rather than too little. You don’t want to get toward the end of your retirement and have to start working again because you ran out of funds. This is why I tell my clients that the sooner you can start saving for retirement, the better.

Myth No. 3: Medicare will cover all of my health care needs

Despite what many people think, Medicare doesn’t always cover all of your medical needs. While it can provide valuable health insurance for retirees, it wasn’t designed to cover everything. It does not cover all medications or forms of care, such as nursing homes and long-term care. It also does not cover vision or dental, an essential part of most retirees' medical needs.

As retirees age, their medical costs will get more expensive. The 2024 Fidelity Retiree Health Care Cost Estimate found that a 65-year-old will spend an average of $165,000 on health care expenses in retirement. To help prevent yourself from having to tap into your savings for medical costs during retirement, there are a few options you can utilize. Start contributing to a health savings account (HSA). You can use these funds for many insurance premiums in retirement. Planning for long-term care and other medical expenses not covered by Medicare is an important part of a comprehensive retirement plan. Consider purchasing long-term care insurance. For many retirees and their families, having a long-term care plan can help with some of the financial, emotional and physical burden of providing and paying for care.

Myth No. 4: Expenses will decrease in retirement

While many expenses, like gas or work clothes, may decrease in retirement, some expenses will actually increase. Are you planning on traveling during retirement? Those expenses could easily go up because you have more flexibility and time to travel. As I mentioned above, your medical costs may increase as well since Medicare will not cover everything. Health care could become one of your highest expenses in retirement if you don’t plan for it. Also, when you plan for retirement, make sure you factor inflation into your expenses. A good rule of thumb is to overestimate your expenses wherever you can, so you can put aside more than you think you need. Having extra is always better than not having enough.

Myth No. 5: I’ll be in a lower tax bracket when I retire

Your income may decline when you enter retirement, resulting in a lower tax bracket. However, if you have a lot of money in tax-deferred retirement plans subject to required minimum distributions (RMDs), then you could actually see your income increase. This could result in higher income taxes, which you need to plan for. Most retirees will stay in the same tax bracket when they retire, and if they do move to a lower tax bracket it’s usually only by a few percentage points.

Retirement planning doesn’t have to be confusing or hard. Believing these retirement myths could set you down the wrong path. By taking the time to separate fact from fiction, you can approach your retirement with confidence. It’s important to sit down with a financial adviser who will be able to answer any questions you may have.

Drake & Associates is an independent investment advisory firm registered with the U.S. Securities & Exchange Commission. This is prepared for informational purposes only. It does not address specific investment objectives, or the financial situation and the particular needs of any person who may view this report. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice. The information cited is believed to be from reliable sources, Drake & Associates assumes no obligation to update this information, or to advise on further development relating to it. Past performance is not indicative of future results. Registration as an investment adviser does not imply a certain level of skill or training.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.