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Featuring a 35-Minute Educational Video with Blair Tushaus

Long-term care planning is not just about preparing for a nursing home. It is about deciding how you may pay for extended support whether at home, in assisted living, in memory care, or in a facility, without letting one health event capsize an otherwise well-built retirement plan.

I explain in the video that retirement risk is something many people underestimate: longevity, rising care expenses, and Medicare limitations can leave families funding long-term care on their own. According to the Administration for Community Living, someone turning 65 today has almost a 70% chance of needing some type of long-term care services and support, and 20% may need care for longer than five years.

Medicare is often misunderstood here. Medicare.gov states that Medicare does not pay for long-term care and that most non-medical long-term care, including help with daily activities, is not covered by Medicare or most health insurance.

In other words, long-term care planning is not a “maybe later” conversation. It is a retirement income, tax, investment, and legacy conversation. The goal is not to predict the future perfectly, but rather to build enough flexibility so your plan can ride through rough water if care is needed.

Key Takeaways

  • Long-term care may be one of the largest unplanned expenses in retirement, especially as people live longer and care needs stretch over multiple years.
  • Medicare generally does not pay for long-term custodial care, which may include help with bathing, dressing, transportation, meals, and other daily needs.
  • Traditional long-term care insurance may require medical underwriting, ongoing premiums, and a “use it or lose it” tradeoff if benefits are never needed.
  • The traditional long-term care insurance market has changed significantly; Milliman notes that fewer than 15 carriers remain in the market after sales began declining rapidly in the early 2000s.
  • The alternative approach that we implement at TWM is designed to treat long-term care planning more like an asset strategy, with flexibility, cash value, potential tax-deferred growth, principal-protection features, and long-term care benefits that may be available if needed.

What Is Long-Term Care Planning?

Long-term care planning is the process of deciding how you may pay for extended care if chronic illness, cognitive decline, injury, or aging makes it difficult to live independently.

Long-term care can include medical and non-medical support. Medicare.gov describes it as care for people with chronic illness or disability, and notes that most long-term care helps with basic personal tasks of everyday life, such as dressing, bathing, using the bathroom, meals, transportation, and adult day health care.

Why Long-Term Care Planning Matters in Retirement

I make a simple but important point in the video: because people are living longer, retirement assets may need to last longer. A longer retirement can be a wonderful gift, but it also increases the number of years where healthcare and care-related expenses could appear.

You may have a plan for Social Security, portfolio withdrawals, travel, taxes, and legacy. But if long-term care is not built into that plan, one extended care event could pull money from places you intended for income, a spouse, children, charity, or lifestyle.

Long-Term Care Is a Family Issue, Not Just a Financial Issue

When long-term care is not planned for, the cost may show up in more than one place. It may show up in a portfolio withdrawal. It may show up in a spouse’s lifestyle. It may show up in an adult child’s schedule. It may show up in an estate plan that no longer works the way the family expected.

That is why long-term care planning should be coordinated with retirement income, tax planning, investment management, healthcare planning, and estate planning, and not handled as a separate island. At Tushaus Wealth Management, we do just that.

Why Long-Term Care Can Be a Retirement Wildcard

The Need Is Common, but the Timing Is Uncertain

The Administration for Community Living reports that someone turning 65 today has almost a 70% chance of needing long-term care services and support at some point. It also notes that, on average, women need care longer than men, and that 20% of today’s 65-year-olds may need care for longer than five years.

That uncertainty is what makes long-term care so difficult to plan for. You may never need paid care. You may need a few months of help at home. You may need years of memory care. A good retirement plan should consider all three possibilities.

Costs Can Vary Dramatically

CareScout’s 2025 Cost of Care Survey gathered more than 25,000 long-term care provider rates nationwide, covering non-medical caregiving, private duty nursing, adult day health care, assisted living communities, and nursing homes. CareScout also notes that actual long-term care expenses may vary based on individual care needs, provider availability, and local market conditions.

That means national averages are only a starting point. A retiree in San Diego, Scottsdale, or another high-cost market may face a very different care budget than someone in a lower-cost area. The setting also matters: in-home care, assisted living, memory care, and nursing home care can each create a different financial impact.

Medicare May Not Be the Safety Net Many People Expect

My video emphasizes one of the biggest planning gaps: Medicare does not cover long-term care in the way many families assume.

Medicare.gov is direct: “Medicare doesn’t pay for long-term care.” It also states that you pay all costs for non-covered services, including most long-term care.

This is where many retirement plans drift off course. Medicare may help with acute medical needs and certain skilled care situations, but it is generally not designed to fund years of custodial care, assisted living, memory care, or extended in-home support.

Why Traditional Long-Term Care Insurance May Feel Inefficient

Traditional long-term care insurance was designed to help cover care costs, but it may not fit every retiree today.

The common challenges include:

  • Medical underwriting that may lead to rejection.
  • Ongoing premiums that may become difficult to maintain.
  • Premium dollars that may feel “wasted” if care is never needed.
  • Potential premium increases over time.
  • Fewer traditional policy options than in previous decades.

Milliman notes that long-term care insurance is nearly 50 years old, that more than 100 companies sold policies in the 1990s, and that sales began declining rapidly after 2003. Milliman also reports that fewer than 15 carriers remain in the market.

The NAIC has also focused on long-term care insurance rate increases, reduced benefit options, reserve adequacy, insurer solvency, and product innovation, which is another sign that the traditional market has faced meaningful pressure.

This does not mean traditional long-term care insurance is “bad.” For some families, it may still be appropriate. But it does mean retirees should understand the tradeoffs before anchoring their entire care plan to a policy that may be expensive, difficult to qualify for, or frustrating if benefits are never used.

The Investment-First Alternative

I introduce an alternative strategy referred to as “Evolve.” Rather than treating long-term care planning only as a traditional insurance premium, this approach is described as an investment-first solution with long-term care benefits available if care is needed.

The key idea is flexibility: instead of paying premiums into a policy that may never be used, the strategy is designed to keep the money connected to the retiree’s broader financial life.

How the Evolve-Style Approach Is Designed to Work

The strategy is designed to include:

  • Tax-deferred growth.
  • Cash value.
  • No ongoing premiums or administrative fees.
  • No medical underwriting.
  • Principal-protection features.
  • Return potential tied to market performance while limiting downside market exposure.
  • Flexibility if long-term care is never needed.
  • Long-term care benefits if care is needed.
  • A contract-defined payout structure that may adjust for inflation and may continue even if the initial investment is depleted, depending on the contract terms.

At Tushaus Wealth Management, we consider innovative long-term care solutions that may offer income sources, flexibility, and principal protection without traditional insurance underwriting. Also, depending on the solution, funds may still be accessible for other spending needs, passed to beneficiaries, or rolled into other investment tools if the long-term care benefit is not needed.

For many retirees, the biggest hesitation around traditional long-term care insurance is not the care benefit, it is the possibility of paying for something they may never use. An investment-first approach may help address that concern by keeping assets in the plan rather than sending premiums overboard.

What Happens If You Never Need Long-Term Care?

If the funds are not needed for long-term care, they remain part of the individual’s assets and may be passed on to beneficiaries. Depending on the long-term care solution, funds may still be accessed for other spending needs or rolled into other investment tools as well.

It’s less like buying a policy and more like repositioning an asset for multiple possible outcomes.

What Happens If You Do Need Long-Term Care?

If care is needed, the solution may provide a contract-defined, inflation-adjusted payout that can help fund care. The exact benefit, duration, inflation adjustment, liquidity, surrender terms, tax treatment, and limitations should be reviewed carefully before any strategy is implemented.

This is where personalized planning matters. The right question is not simply, “Does this product have a long-term care benefit?” The better question is, “How would this strategy behave inside my retirement income plan, my tax plan, my estate plan, and my care preferences?”

How to Decide Whether Long-Term Care Planning Belongs in Your Retirement Plan

For most retirees and near-retirees, the question is not whether long-term care is pleasant to think about. It is not. The question is whether ignoring it could create a bigger problem later.

Start With the Care Conversation

Before comparing policies or strategies, start with practical questions:

  • Where would you prefer to receive care: At home, in a community setting, or in a facility?
  • Who would coordinate care if you could not?
  • Would a spouse or adult child be expected to help?
  • What assets would you be comfortable using for care?
  • What assets would you prefer to protect for income, legacy, or a surviving spouse?

These answers give the plan direction. They help determine whether you are trying to insure the risk, self-fund it, partially fund it, or use a hybrid strategy.

Stress-Test the Retirement Income Plan

Our strategy at TWM emphasizes preparing for major costs like healthcare and long-term care as part of a broader retirement income plan.

That stress test should ask: What happens if long-term care costs begin five years into retirement? What if they begin 20 years into retirement? What if the market is down when withdrawals are needed? What if one spouse needs care and the other spouse still needs income?

Long-term care planning should not be isolated from investment management. If care costs force large withdrawals during a market downturn, the impact may be very different than if assets are already positioned for liquidity, protection, and income.

Compare the Tradeoffs

There is no single “perfect” long-term care strategy for every family. The right approach depends on age, health, assets, income needs, tax situation, estate goals, risk tolerance, and family dynamics.

A planning conversation may compare:

Traditional long-term care insurance: May provide dedicated benefits, but may require underwriting, ongoing premiums, and careful review of premium stability and policy terms.

Self-funding: May preserve flexibility, but could expose the portfolio to a large care expense at an inconvenient time.

Investment-first or hybrid long-term care solutions: May provide more flexibility and potential asset value if care is never needed, but contract terms, costs, limitations, carrier strength, and suitability should be reviewed closely.

The goal is not to chase the newest tool. The goal is to choose the tool that best fits the job.

Common Long-Term Care Planning Mistakes to Avoid

Mistake 1: Assuming Medicare Will Pay

Medicare generally does not pay for long-term custodial care, and Medicare.gov states that you pay all costs for non-covered services, including most long-term care.

This assumption can create a dangerous planning gap.

Mistake 2: Waiting Until Care Is Needed

Traditional long-term care policies may require medical underwriting, and the approved TWM video notes that underwriting may lead to rejection.

Once health changes, some planning doors may narrow. Earlier planning may provide more options.

Mistake 3: Planning Only for Nursing Home Care

Long-term care may happen at home, in the community, in assisted living, or in a nursing home. Medicare.gov notes that non-medical long-term care services can be received at home, in the community, in an assisted living facility, or in a nursing home.

Many families would prefer to drop anchor at home for as long as possible. A thoughtful plan should account for that preference.

Mistake 4: Ignoring Inflation and Local Care Costs

CareScout notes that long-term care costs can vary widely by location, care setting, and level of support required.

If your plan uses outdated cost estimates, it may look stronger on paper than it is in real life.

Mistake 5: Treating Long-Term Care as Separate From the Rest of the Plan

Long-term care can affect income, taxes, investments, liquidity, estate planning, and family decision-making. A strong plan should connect those pieces before a care event arrives.

Conclusion

Long-term care planning may not be the most exciting part of retirement planning, but it can be one of the most important. I highlighted why traditional approaches may feel inefficient and why an investment-first alternative may give some retirees more flexibility, principal-protection features, and potential long-term care benefits.

If you want to see whether your retirement plan has a strong long-term care anchor, consider booking a complimentary 1-hour Strategy Session with us or downloading our free Retirement Checklist to start reviewing the key areas of your plan.

Frequently Asked Questions

What is long-term care planning?

Long-term care planning is the process of deciding how you may pay for extended support if you need help with daily activities, chronic illness, disability, or cognitive decline. It may include in-home care, assisted living, memory care, nursing home care, or a combination of support options.

Does Medicare pay for long-term care?

Generally, no. Medicare.gov states that Medicare does not pay for long-term care and that most non-medical long-term care is not covered by Medicare or most health insurance. That is why many retirees may need a separate plan for care-related costs.

What percentage of retirees will need long-term care?

The Administration for Community Living reports that someone turning 65 today has almost a 70% chance of needing some type of long-term care services and support. It also reports that 20% may need care for longer than five years. The timing, setting, and cost of that care can vary widely.

Why can traditional long-term care insurance be difficult?

Traditional long-term care insurance may require medical underwriting, ongoing premiums, and careful review of policy terms. The market has also changed: Milliman reports that fewer than 15 carriers remain in the long-term care insurance market after sales began declining rapidly in the early 2000s.

What happens if I buy long-term care coverage and never need care?

It depends on the type of coverage. Some traditional policies may not provide value if benefits are never used, while certain hybrid or investment-first solutions may allow funds to remain accessible, pass to beneficiaries, or be repositioned, depending on the contract.

What is an investment-first long-term care strategy?

An investment-first long-term care strategy is designed to connect long-term care protection with an asset that may retain value if care is never needed. The Evolve-style approach discussed by TWM is designed to offer tax-deferred growth, cash value, principal-protection features, and long-term care benefits if care is needed. Exact features depend on the specific contract and should be reviewed before implementation.

When should I start long-term care planning?

Many people begin evaluating long-term care planning in their 50s or 60s, but the right timing depends on health, assets, retirement goals, and family needs. Planning earlier may provide more flexibility, especially because traditional coverage may require underwriting and care costs can affect retirement income later.

How can Tushaus Wealth Management help with long-term care planning?

Tushaus Wealth Management helps clients prepare for major retirement expenses, including healthcare and long-term care, as part of a broader financial planning process. TWM helps clients cover essentials, fund goals, and prepare for major costs like healthcare and long-term care. The next step may be a complimentary 15-minute intro call or a free 1-hour strategy session to review how long-term care could fit into your retirement plan.

Sources

The information presented in this piece is the opinion of Tushaus Group, LLC and does not reflect the view of any other person or entity. The information provided is believed to be from reliable sources but no liability is accepted for any inaccuracies. This is for information purposes and should not be construed as an investment recommendation. Past performance is no guarantee of future performance. Tushaus Group, LLC is a Registered Investment Advisor.
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