I'm a Financial Adviser: This Could be the Single Biggest Threat to an Otherwise Solid Retirement Plan
You most likely will need some form of long-term care as you get older. Not planning for that not only puts your assets at risk but also your family's peace of mind. Here's how to tackle the beast.
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.
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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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