Pay Now, Care Later


Chutes and Ladders was always one of my favorite childhood board games. Even if you had a devastating setback, you could at least enjoy the fun little slide, and then quickly find a ladder and climb back up. If there was a financial planning board game (so fun!) the slide would be your future long-term care costs, and there would be no ladders to climb back up. If you are 45-60 years old and question the ability of your nest egg to cover a monstrous expense during retirement, OR you are the child of such a person, read on.

So what is long-term care insurance (LTCI)?  LTC is what you don’t get from medical insurance – someone to help you with bathing, eating, walking, getting dressed, and more. If you’re already nodding off, join the club. This is incredibly depressing and even boring stuff. Who the heck wants to think about being 80, having dementia, and needing help to the bathroom?

I’m convinced that most of us don’t act because LTCI is sold as if it’s something WE need. It’s not about us! It’s about those we care about. Most of you will have someone who cares deeply about you when you reach your 80th birthday.  If you need LTC later, and you don’t have the assets to cover the costs, the issue isn’t “How long before I end up on the streets?”; The question to ask is, “Am I prepared to have my life partner, a family member, or a close friend, put their life on hold and play full-time nurse for me?”

Attention Women and Gay Men

While I think that everyone should consider it at some point in their lives, LTCI is especially crucial, in my view, for women and the gay community. Women generally live longer than men, so they are more likely to need LTC. The majority of gay men don’t have children. This means that if he is living alone by his 80th birthday, he won’t have a grown child who can come to the rescue if things go south financially. The insurance is also more affordable for the typical gay man – he will have greater disposable income for more than 2 decades, roughly the time it takes a parent to get a child through college. For the cost of baby formula, a gay man can buy a LTCI policy.

The Costs

Imagine you would need $75,000 for a year’s worth of LTC costs.  Then imagine that inflation causes this cost to rise to around $250,000 by the time you need it.  As far as what you need to pay now in annual premiums, figure between $1,000 and $5,000 per year (for life), with it being cheaper the earlier you are when you start paying premiums. Couples, including registered or unregistered domestic partners, are eligible for discounts if they both qualify for a policy (yes, there is underwriting). If you’re self-employed (sole proprietor, S Corp, C Corp, partner or LLC owner), you may be able to deduct most or all of the premiums.

Yes, it’s possible to invest the money you’d otherwise put towards LTCI premiums. In theory, if those invested dollars could grow to be worth more than the future cost of insurance, an argument can be made for not getting the insurance. Or, if you’re one of the few who will receive a pension and your 401k and other investments are just the gravy, there may not be a need for this. But, I advise people to tread carefully when assuming this. The statistics may show that people need about 3 years of LTC on average, but any one of us could be the person who needs it for 10 years or more. Am I saying you should insure for the long shot? No. But get some coverage! Even the cheapest policy will buy you some time and reduce the chances that someone’s retirement portfolio gets decimated.

I invite you to talk with your financial planner to see if you or your aging loved ones are on track to having enough assets to cover this possibility. 15 minutes could spare a loved one several years of hell.



The opinions expressed are those of the author and are subject to change without notice in reaction to shifting market conditions. This blog is provided for informational purposes, and it is not to be construed as an offer, solicitation, recommendation or endorsement of any particular security, products, or services.

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