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How long-term care planning can help your loved ones

Key takeaways

  • Planning ahead can help families manage the financial, personal, and emotional challenges that may arise when loved ones need services.
  • Creating a plan and communicating it to family members can lay the groundwork for success.
  • Planning for couples can be more complex if both need care at the same time or one spouse is too frail to take care of others.
  • Insurance can be one of several ways to help maintain quality of life for both you and your family should you need long-term care yourself. A financial professional can help you plan for your long-term care needs.

It may be difficult for healthy people in their 40s, 50s, and 60s to envision a time in the future when they need long-term help to care for themselves or their spouse. Contemplating losing the ability to live independently later in life is also likely to raise anxiety, both about what may happen to you and about the financial implications. Many realize later that being able to afford and receive care in the privacy of their own home—near family members—or in an external facility is a significant component of financial planning.

“Long-term care is something many of us will need during our lifetime,” says Stefne Lynch, vice president of annuity product management and client engagement at Fidelity. “Poor planning can have a significant financial impact on the people we love most.”

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The importance of planning

Long-term care planning for families often can be complex, and people may tend to avoid discussing it because it can be an emotional topic with important questions about the financial implications of extended care.

First steps might include creating a written plan and having conversations with family about the challenges. Next steps could include discussions with family, a financial professional, or both about different ways to pay for extended care and understanding the numerous options available.

“It’s important to be proactive and not reactive,” says Lynch. “Most people don’t have a plan in place and haven’t shared one with loved ones.”

A good starting point for the conversation could be asking yourself and others: If something were to happen today, or 10 to 20 years from now, who do you want in charge of your care? Would that be a family member, a spouse, partner, or might it involve hiring someone to take on that role?

Once you’ve settled on the person or people, it’s important to communicate your wishes to them, and make sure they understand what the job entails. Family members who act as caregivers may spend 24 hours per week performing that job on average.1 And many care providers may already be working full or part time, or they may have children they need to care for. As a result, more than 60% of caregivers reported at least one work-related consequence, such as arriving late, leaving early, taking time off, or retiring sooner than planned. Additionally, personal expenses related to care can average $7,000 or more annually.2 Will they be able to handle duties such as feeding you, bathing and dressing you, or potentially changing your diapers?

“You have to consider what that might do to your relationship if you have this change in dynamic,” Lynch says, adding that some spouses or family members may not be comfortable with the duties and change in relationship dynamics, and they might prefer to have someone else do the work.

Another important consideration: Not everyone may be able to count on family or a partner for their extended-care needs. For those planning care by themselves, purchasing long-term care coverage could serve as the cornerstone for a plan that might also include exploring community care resources, personal networks, and careful estate planning.

Paying for long-term care

Health care is one of the largest costs in retirement, and long-term care is no exception.

According to the Fidelity Retiree Health Care Cost Estimate, a single person age 65 in 2023 may need approximately $157,500 saved (after tax) to cover health care expenses in retirement. An average retired couple age 65 in 2023 may need approximately $315,000 saved.3

In addition to health care expenses, long-term care can cost an additional $116,000 or more per person annually for a private room in a nursing home.4 An important part of the equation: The average person may need long-term care for approximately 3 years, and 7 out of 10 people will need long-term care in their lifetime.5

With that in mind, it’s important to understand different ways to fund long-term care. Methods include self-funding either part or all the expense, long-term care insurance, hybrid life insurance and long-term care insurance, and government programs that may help pay for the costs of care, among other options.

  • Self-funding. Paying out of pocket, such as from savings, a pension, Social Security benefits, or retirement savings to fund all or part of long-term care needs. Some people may set aside some savings specifically for long-term care, and then purchase long-term care coverage for the rest of their expected costs.
  • Long-term care (LTC) insurance. An insurance policy that helps pay for different types of LTC services, such as home care or a nursing home. Policies are typically purchased in your 50s and 60s, and premiums are paid annually or monthly. Benefits usually have a set term of 2 to 6 years once a physician certifies you can’t perform 2 to 3 activities of daily living (ADLs), such as bathing or dressing.
  • Hybrid life insurance and LTC. In addition to traditional long-term care insurance policies, newer "hybrid" policies are designed to provide a benefit even if the policyholder does not file a claim. Customers can potentially use it for long-term care when the need arises, as a death benefit if they pass away before needing long-term care, or if their needs change, they can potentially surrender it for its cash value.
  • Government programs. Some state and federal programs can help with long-term care related costs. For example, Medicaid,6 the federal public assistance program, may cover long-term care for seniors who meet state eligibility requirements. Additionally, the Program of All-Inclusive Care for the Elderly (PACE)7 is administered by Medicare and Medicaid, and can provide medical, social, and wellness services to community-dwelling individuals. The goal is to help people live in their homes rather than nursing homes.

Find out more by visiting What is long-term care?

What about professional care?

Professional care can be a substitute for relying on your partner or family. While professional long-term care is expensive, using insurance as part of a plan for care can make a difference in everyone's quality of life as a person ages. The key to good decision-making is to weigh everyone’s needs against the costs and potential benefits of the options. According to the most recent data from Genworth Financial, the annual national median cost of hiring a home health aide—the most common type of care arrangement—was $75,504 in 2023.8

Be sure to ask about these options when you meet with your financial professional.

Read Viewpoints on Long-term care: Options and considerations

Faced with these costs, some families might prefer to care for a loved one themselves. More than two-thirds of people surveyed by the Nationwide Retirement Institute said they would prefer to receive long-term care at their own home (or that of a family member) and rely on a spouse or family member for care, but would not expect a family member to provide long-term care if they were unable to compensate them.9 Genworth's research shows that doing so places significant demands on family members’ lives—and finances—and often requires sacrificing their own families and careers.

Read Viewpoints on How to take care of aging parents and yourself

The more you know

It's important to know how to recognize early indicators that care might be needed. One sign to watch for is increased difficulty performing the "instrumental activities of daily living" or IADLs. These activities are integral to independent living, including housekeeping, managing money, taking medications, preparing meals, shopping for the household, communicating via phone and email, caring for pets, and being able to respond to urgent situations. Difficulties with these activities typically precede the need for long-term care assistance, which is typically when one can no longer perform 2 ADLs (e.g., eating, bathing, dressing) without help.

Planning for couples

Though at first it may seem easy, long-term care planning for couples is more complex than planning for an individual. That’s because there may be a temptation to assume, “If one of us needs help, the other will provide it.” However, both partners may need long-term care, and potentially even at the same time. This creates a risk that one spouse won’t be able to take care of the other when the need arises.

Another consideration is even if one spouse is still physically capable, they may find it difficult to provide the required level of care. Assistance with activities of daily living does not require clinical skills, but it is a major undertaking. The healthy spouse needs to make an emotional commitment and have the mental fortitude required to care for a disabled spouse.

To help put the variable aspects into perspective for planning purposes, consider that at any time each spouse will be in one of the following 4 health categories:

  • Healthy: Able to care for oneself and a spouse, if the spouse were to become disabled.
  • Frail: Able to care for oneself, but unable to care for a disabled spouse. For example, if the disabled spouse fell, the frail partner might not have the strength required to help the disabled person get back on their feet.
  • Disabled: Unable to perform at least 2 ADLs, or cognitively impaired, thus requiring long-term care assistance.
  • Deceased.

The need for professional care (i.e., someone other than a spouse), is prompted by how the couple moves among these 4 health states. As the following graphic shows, outside care for one or both spouses is needed whenever at least one spouse is disabled and the other spouse is not healthy.

A thoughtful long-term care plan is all about balance—weighing what you can afford, the kind of care you expect, and the risks you might face. It is not just a financial decision because using insurance may help meet the emotional and physical needs of caregivers such as family members and friends. Made carefully, it's a decision that may help provide you with some peace of mind for your retirement.

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1., 2. TIAA Institute, "As People Live Longer, Family Caregivers Face Financial Challenges," November 1, 2023


Estimate based on individuals retiring in 2023, 65-years-old, with life expectancies that align with Society of Actuaries' RP-2014 Healthy Annuitant rates projected with Mortality Improvements Scale MP-2020 as of 2022. Actual assets needed may be more or less depending on actual health status, area of residence, and longevity. Estimate is net of taxes. The Fidelity Retiree Health Care Cost Estimate assumes individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s insurance program, original Medicare. The calculation takes into account Medicare Part B base premiums and cost-sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance). It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by original Medicare. The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care.

4. New York Life, 2023 Cost of Care Survey 5. Genworth, 2023 Cost of Care Survey 6. For more information regarding benefits provided by Medicaid (Medi-CAL in California) visit Medicaid guidelines vary by state. Contact your local Medicaid office for details. 7. Individuals can join PACE if they meet certain conditions. For more information contact your local Medicare or Medicaid office for details. 8. Genworth, 2023 Cost of Care Survey 9. The Nationwide Retirement Institute® 2023 Long-term Care Survey and "Long-Term Care Consumer Survey," Nationwide/Harris Poll survey (2021).

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

The third parties mentioned herein and Fidelity Investments are independent entities and are not legally affiliated.

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Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

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