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How to prepare for long-term care costs, according to experts

Long-term care insurance can help reduce the costs of care as you age. Getty Images

The reality of aging is that many people lose physical and cognitive abilities, which then require medical and caregiving support. Meanwhile, the cost of health care and long-term care keep going up and are too expensive for many people to pay for out of their own pockets.

While recent inflation has increased overall prices faster than medical care costs have gone up, the long-term trend shows that medical care prices have gone up by 114.3% from 2000 to mid-2023, compared with 80.8% for all goods and services, according to a KFF analysis. Many seniors can't keep up with these increases. In fact, 60% would not be able to afford two years of in-home long-term care, finds the National Council on Aging.

But hoping that you don't need long-term care probably isn't a good strategy. Someone who's 65 today has nearly a 7 out of 10 chance of needing long-term care at some point during the rest of their life, according to the Administration for Community Living, part of the U.S. Department of Health & Human Services.

So, to prepare for the cost of long-term care, experts recommend taking multiple approaches. Start by exploring your long-term care insurance options today to learn more.

How to prepare for long-term care costs, according to experts

Here are four effective ways to prepare for long-term care costs, according to the experts we spoke to.

Plan ahead

While it might sound obvious, the sooner you can plan for long-term care costs, the better off you generally will be. Starting to save before you need the money can give your funds longer to grow, and getting policies like long-term care insurance or life insurance are typically more affordable if purchased earlier in life.

Many people, however, wait until they need long-term care.

"The most common and least efficient option is to pay as you go," says Steven W. Gaito, a self-employed Certified Financial Planner (CFP). "This can leave catastrophic consequences for surviving spouses and minimize or eliminate an estate."

Instead, consider making a plan well before retirement age. "The best ways to prepare for long-term care costs are to plan ahead, ideally in your 40s or 50s," says Bryan M. Kuderna, CFP and founder of Kuderna Financial Team.

Get a head start by researching your long-term care insurance options online today.

Consider traditional long-term care insurance

Part of making a plan earlier in life could be purchasing traditional long-term care insurance policies that can cover some of the costs of things like in-home aides or nursing homes if needed. However, it's important to realize that you may have limited options in this regard.

"Standalone long-term care products are nothing like they used to be, as the market has shrunk dramatically," says Kuderna. "Benefits have gone down while rates have gone up."

Still, long-term care insurance can help offset some of the out-of-pocket costs you might otherwise face. If you can afford the premiums that could be a better option than paying for care yourself later on.

Consider hybrid long-term care insurance

While the market may be shifting for traditional long-term care insurance policies, an alternative could be to purchase hybrid long-term care insurance policies that combine long-term care insurance with life insurance or annuities.

"The nice part of these plans is that if you are fortunate and do not need the care, it is passed along to your spouse or heirs and in some cases tax-free," says Gaito.

However, hybrid policies can be complex. When you add in the extra layer of life insurance or annuities, which often carry additional fees and requirements, things can get even more complex. So, be sure you understand what you're getting into before purchasing.

"It's important to recognize these vehicles as a supplement to their overall retirement and financial plan, not as the sole solution for long-term care," says Kuderna.

Identify ways to reduce long-term care costs

Lastly, while self-funding your long-term care can be too expensive for many people, you may be able to at least make long-term care more affordable — perhaps more in line with limits from any insurance policies you buy — if you take a more discerning approach to long-term care costs.

For example, you might not need a full-time in-home aide but can instead use an aide's services as a supplement to family care.

"Since the majority of care is usually provided by families, having ways to give them a break is very important. Having aides come at critical times during the day like getting out of bed and dressing and assisting getting back in bed are often the most stressful times, but they are not all day. If you can find someone that will assist with these tasks, providing food and transportation can be easily supplemented with strategic shopping," says Gaito.

For example, you might be able to get ready-made meals from grocery stores, he says. That can be a lot more affordable than other approaches if you can no longer cook on your own. Similarly, "not paying for full-blown skilled care before it's necessary is key; there's no need to pay a doctor or RN to pick up groceries," notes Kuderna.

Also look for programs that provide long-term care benefits. "Probably the most valuable and often overlooked benefits are for veterans," says Kuderna. "Anyone who has served should familiarize themselves with VA benefits or make sure their caregiver is aware."

You also might find more affordable options within your community, especially if you need limited support. "Some churches and religious organizations are providing what is called adult day care, which is also a much more affordable option to in-home care," notes Gaito.

The bottom line

Long-term care tends to be expensive, but there are ways to get the support you need more affordably. In many cases, taking a mixed approach, such as saving and investing early in life for care you might need later on, purchasing insurance policies and getting strategic about what services you pay for can make long-term costs more manageable. 

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