Long-Term Care Strategies in Retirement Planning

In a workshop session at our Horizons 2025 conference, Director of College Research Kaylee Ranck, PhD, and Managing Director of the American College Center for Special Needs Joellen Meckley, JD, MHS, ChSNC®, discussed the topic of long-term care (LTC) and its impacts on retirement planning.

ThinkAdvisor’s John Manganaro moderated the session, designed to inform financial professionals of the potential threat that LTC costs can have on retirement plans, as well as offer tools for retirement advisors to protect against potentially excessive costs of care.

Why is Long-Term Care Important?

While many professionals may know anecdotally that LTC costs can be prohibitive, the latest research reinforces that reality. In their discussion, Meckley and Ranck presented some sobering statistics, including the annual median cost of a private nursing home room ($104,000 per year) and that 70% of people age 65 or older will at some point require long-term care — one-fifth of whom will need it for at least five years.¹

The burdens of LTC costs hit women especially hard as they are commonly caregivers, with women caregivers losing over $300,000 in lifetime earnings on average to deal with healthcare costs in retirement. Additionally, 60% of women caregivers experience disruptions to their work lives stemming from the long-term care needs of others.² Our 2023 Retirement Income Literacy Study results reinforce this point for women and caregivers across the board and drive home the importance of considering healthcare costs in retirement: nearly 80% of respondents said they currently had no plan in place to fund potential LTC needs.

“Women are often the safety net, providing care, absorbing the cost, and sometimes sacrificing career opportunities,” Ranck said. “Planning for long-term care helps redistribute that burden.”

LTC Strategies and Solutions

Ranck and Meckley added, however, that many options for retirement income planning can help mitigate long-term care costs. Insurance is one such option through either traditional LTC insurance policies, hybrid policies, or life insurance with LTC riders. Health Savings Accounts (HSAs) can also provide a pre-tax source of healthcare-specific savings for retirees to draw on later in life. However, HSAs must be funded before signing up for Medicare and are only available to individuals enrolled in high-deductible health plans, making early planning essential.

Additionally, the duo also highlighted that incentives for more in-depth LTC planning exist for retirement advisors at the federal and state level. Under the SECURE 2.0 Act, individuals may use qualified account distributions to pay LTC premiums without an early withdrawal penalty. While state benefit options may vary across the country, a dozen states are currently considering further LTC tax legislation, and other options like the LTCi Partnership Program exist to protect assets from Medicaid estate recovery programs should the burdens of LTC costs become too high.

In the end, Meckley and Ranck emphasize there are two options for dealing with long-term care costs: to accept the risk through income-based or asset-based funding options like Social Security, pensions, and other savings vehicles; or to transfer the risk with an LTC insurance option. In either case, potential clients need a retirement advisor knowledgeable enough to provide these options — and a financial planning certification like the Retirement Income Certified Professional® (RICP®) designation can help you provide that specialized planning service.

"When clients wait until a crisis hits, the options narrow, and the emotional toll spikes,” Ranck said. “Planning proactively means preserving choices and a sense of control."

More From The College

• Explore the RICP® Program
• Visit the American College Center for Special Needs