Why Every Retiree Needs a Liquid Side Fund for Healthcare

How fixed annuities offer protected growth and penalty-free access when unexpected health expenses strike.

The Problem:

Healthcare is the #1 wild card in retirement. Even with Medicare, out-of-pocket costs are rising, and long-term care isn’t covered unless you qualify for Medicaid.

🧾 Stat to share:
Fidelity estimates that a 65-year-old couple retiring today will need $315,000 for healthcare expenses over the course of retirement (not including LTC).*

So what happens when a client needs extra cash — but the market is down, or their money is tied up in CDs, real estate, or retirement accounts with penalties?

The Annuity Angle:

Fixed annuities (especially MYGAs and fixed indexed annuities) aren’t just for retirement income. They can also be set up as a “protected side fund” with built-in access to the money in health-related emergencies.

Many annuities offer:

• Penalty-free withdrawals (e.g. 10% annually)

• Nursing home and terminal illness waivers

• Chronic illness access in some cases

This means the client’s principal is protected, it’s growing safely, and they have access if life throws a curveball — like an injury, a stroke, or a sudden care need.

Example Talking Point for Advisors:

“You probably have a rainy day fund — but have you considered a rainy day fund that earns 5%+ and lets you access it if you land in the hospital or need care?”
That’s what this annuity is designed for. You’re not locking the money away — you’re protecting it and giving yourself another option if life doesn’t go according to plan.”

When to Use This Strategy:

• Clients who can’t qualify for LTC insurance due to health

• Clients who refuse to pay LTC premiums

• Clients who want to keep their savings safe but accessible

• Adult children planning to help parents (multi-generational planning)

Quick Advisor Reminder:

Don’t oversell the liquidity — not all carriers are the same. Always verify:

• Free withdrawal terms (first year? cumulative?)

• Specific health waivers included

• Suitability based on the client’s time horizon

Bottom Line:

If your clients are nervous about health costs but hate traditional LTC insurance, this strategy gives you a simple entry point:

💬 “Let’s set aside some money in a way that protects it, grows it, and lets you access it if something happens. If you never need it, great — it’s still growing. But if you do, you’ve got a smart fallback.”