Rising Long-Term Care Costs: Key Insights for Financial Advisors

As a financial advisor, one of the most critical yet often overlooked aspects of retirement planning is preparing for long-term care (LTC) expenses. With the cost of care rising rapidly—especially for facility-based care—your clients' financial security could be at significant risk without proper planning.

Why Long-Term Care Planning is Non-Negotiable

If your clients live to 65, there’s a 70% chance they will require some form of long-term care in their lifetime. Yet, only 3% to 4% of Americans aged 50+ currently hold long-term care insurance policies. This gap presents both a challenge and an opportunity for advisors who want to proactively help clients secure their retirement assets.

The Cost of Long-Term Care: A Growing Threat to Retirement Savings

The numbers speak for themselves:

• Home Health Care Aide: $33/hour (national median in 2023)
• Assisted Living Facility: $64,200/year (2023)
• Nursing Home Private Room: $116,800/year (2023)

With an average LTC claim lasting three years, the costs add up quickly. But the real concern is inflation. At a 3% annual inflation rate, in just 25 years, the cost of a nursing home private room could soar to $240,000 per year, amounting to approximately $720,000 for a three-year stay.

How Advisors Can Use This Data to Generate New Cases

Many clients assume they can "self-fund" their long-term care expenses, but when faced with actual numbers, they often reconsider. Here’s how you can turn these insights into actionable conversations:

1. Ask the Right Questions

   • “How would you like to receive care if you ever need it—at home, in assisted living, or in a nursing facility?”
   • “What assets do you plan to use to cover long-term care costs?”
   • “Have you considered how rising costs could impact your retirement income and legacy?”

2. Present Realistic Scenarios

   • Show clients a projected LTC cost analysis based on inflation. Seeing that a three-year stay could cost over $700,000 makes the need for protection more tangible.
   • Compare self-funding vs. leveraging insurance solutions, highlighting how LTC insurance, hybrid life policies, or annuities with LTC riders can help offset costs.

3. Educate Clients on Industry Trends

   • LTC insurance companies paid out a record $14.1 billion in claims in 2023. This underscores the real need and value of these policies.
   • Most claims are for home care and assisted living, not nursing homes. Clients often assume LTC insurance is only for nursing homes, but most policies support in-home care.

Your Role in Helping Clients Protect Their Future

By educating clients on the realities of long-term care costs and offering tailored strategies, you position yourself as a proactive advisor—not just someone who manages assets, but someone who protects wealth and ensures financial dignity in retirement.

Call to Action:
If you’re already discussing retirement planning with your clients, incorporating LTC planning is a natural extension. By addressing it now, you can help them avoid devastating financial and emotional stress later.

Want help structuring these conversations? Let’s connect—I’d love to help you craft strategies that protect your clients while growing your business.