Long-Term Care Planning in 2025: How to Protect Your Retirement and Your Loved Ones

Aging is a journey we all walk, but rarely do we plan for it with the same clarity we apply to retirement or investing. Maybe that’s because it feels personal, even emotional. Or maybe it’s because it involves imagining a version of ourselves that needs more help than we do today.

But planning for long-term care considers health, your financial future, and the legacy you hope to leave behind.

According to the U.S. Department of Health and Human Services, nearly 70% of Americans who turn 65 today will need some form of long-term care¹. That care can come in many forms: help with daily activities at home, assistance in a retirement community, or full-time skilled nursing care. And while those services can offer dignity and safety, they come at a rising cost.

For families across the U.S., the cost of care can be staggering. The national average annual cost of a home health aide now exceeds $65,000, while a private room in a nursing facility can run more than $100,000 per year¹. Without a thoughtful plan in place, these expenses can erode even the most carefully constructed retirement savings.

The earlier you start planning, the more options you may have to protect your retirement, your independence, and your loved ones. Let’s look at the cost of care, how to plan for it financially, and how to make confident decisions that support both your lifestyle and your legacy.

‍

Understanding the Cost of Care in 2025

When people imagine retirement, they often picture travel, hobbies, or time with grandkids–not the steep and rising cost of long-term care. But preparing for potential care needs is one of the most important steps you can take to protect your financial plan.

Aging in Place vs. Facility-Based Care

Many retirees understandably express a desire to stay in their homes for as long as possible. Home is comfortable and familiar. But that doesn’t always mean lower costs. In-home care often involves paying for aides, home modifications, and ongoing medical supervision. Facility-based care, while more structured, can provide round-the-clock assistance, but often at a higher overall cost.

Choosing between these options, or preparing for both, requires financial foresight and a plan that adapts to your evolving needs.

Why Planning Early Matters

Healthcare costs are expected to keep rising, and the likelihood of needing care increases with age. Without a thoughtful plan, the cost of care can quietly become one of the largest threats to your retirement. Our team believes that instead of predicting exactly what kind of care you’ll need, it’s wise to financially prepare if and when that time comes.

‍

Your Options for Long-Term Care Planning

Before locking yourself into one path, set yourself up for success by understanding the options available to you and choosing a strategy that aligns with your broader financial goals. Here are three major options to explore as you look at your options.

Long-Term Care Insurance (LTCI)

Traditional LTC insurance is designed to help cover the cost of care should you need it. The appeal lies in its ability to shift the financial burden away from your retirement assets.

Pros:

• Provides dedicated funds for care expenses
  
  
• Can help preserve your estate for heirs
  
  
• Offers predictable premiums in many policies
  
  

Cons:

• Premiums can be high, especially if purchased later in life
  
  
• Underwriting can be strict, and not everyone qualifies
  
  
• Policy language can be complex and knowing what’s covered matters
  
  

This option may make sense for clients in their 50s or early 60s who are in good health and want protection against significant care expenses.

Hybrid LTC + Life Insurance Policies

These products have grown in popularity, especially among high-net-worth families. A hybrid policy bundles life insurance with long-term care benefits, providing flexibility and often a “return of premium” if care isn’t used. Funds can be used for care or passed to heirs, and premiums can be guaranteed. They can also eliminate the “use it or lose it” concern of traditional LTCI.

They’re particularly appealing for those who want long-term protection without sacrificing liquidity or leaving premiums on the table.

Self-Funding Long-Term Care

Many people can cover care costs out of pocket. This approach is most successful when it is intentionally planned for.

That might mean earmarking a specific investment account as a “care bucket,” using a Health Savings Account (HSA) to fund future medical expenses, or incorporating care costs into your withdrawal strategy in your financial plan. No one can forecast exactly how care will play out, but they can create an adaptable plan.

‍

Medicaid Planning and Asset Protection

When most people begin thinking about long-term care, Medicaid likely isn’t the first tool that comes to mind. And that’s understandable. Many assume it’s a program reserved only for those with limited income or assets. But with the right planning and a long enough runway, Medicaid can become part of a broader strategy to manage future care costs while protecting family wealth.

Understanding Medicaid’s Role in Long-Term Care

Medicaid is one of the largest payers of long-term care in the U.S., covering services like skilled nursing facilities and, in some states, in-home care. But it comes with strict financial eligibility rules, including limits on both income and assets. Generally, an individual must spend down their assets to qualify, often to a level of just a few thousand dollars.

However, not all assets are counted. For example:

• Your primary residence (if you or a spouse live there) is often exempt, up to a certain value
  
  
• One vehicle, household goods, and certain personal items may also be excluded
  
  
• Assets held in specific types of irrevocable trusts may not be counted if structured correctly and early enough
  
  

Pre-Planning Through Estate Strategies

With early planning, it’s possible to structure your finances in a way that protects certain assets while preserving access to care later. This is where estate tools like a Medicaid Asset Protection Trust (MAPT) come into play.

These irrevocable trusts can shelter assets from being counted during Medicaid eligibility, but they require foresight. Most states apply a 5-year lookback period, meaning any gifts or transfers into the trust must happen at least five years before applying for benefits. If done too late, those assets can still be subject to penalties or delays.

Flexibility vs. Protection: Weighing the Trade-Offs

While these strategies can preserve wealth for heirs or a surviving spouse, they aren’t without sacrifice. Placing assets in an irrevocable trust means giving up control and access. You can't easily tap into those funds for discretionary spending. For some families, that’s a worthwhile trade-off. For others, it may feel too restrictive.

That’s why we believe the best Medicaid planning starts with conversations. What are your goals? What kind of care would you want? How important is it to preserve assets for the next generation? Medicaid isn’t a one-size-fits-all solution, but with proactive planning, it can be a thoughtful part of a well-rounded care strategy.

‍

Integrating Long-Term Care into Your Holistic Plan

Whether you're already retired or still years away, how you plan for potential healthcare needs affects your income strategy, estate plan, taxes, and even your investment approach.

Incorporating LTC into Your Broader Financial Picture

Your long-term care strategy shouldn’t live in a silo. It should interact with your estate plan, your investment mix, and your tax decisions.

For example:

• Selling assets to pay for care may create a capital gains event, but there may be smarter ways to fund expenses.
  
  
• Using tax-advantaged accounts like HSAs or leveraging Roth IRAs can provide care funding while minimizing tax impact.
  
  
• Planning ahead for care allows your estate documents to reflect realistic scenarios, not just ideal ones.
  
  

The Value of Unified Planning

Long-term care doesn’t always announce itself with a crisis. It often builds gradually, from hiring help with transportation to requiring full-time assistance. When care costs enter the conversation, many families begin feeling emotionally or financially overwhelmed. But with all aspects of your financial life under one roof with Wealthquest, we can adjust your plan in real time, with insight from the professionals who already know your goals.

‍

Starting the Conversation with Your Family

Planning for long-term care is as much an emotional and psychological exercise as it is a financial one. And yet, it’s a topic many families avoid until a crisis forces their hand. How can you remove the heaviness surrounding those conversations? We believe that starting them early can dismantle the pressure and create opportunities to build the right plan over time.

Why These Conversations Matter

When families talk about care preferences ahead of time, they reduce uncertainty and build trust. You're not just preparing for "what ifs.” You’re giving those closest to you the clarity to support your wishes when the time comes. Whether you're in your 50s, 60s, or already retired, there’s value in being proactive.

Discussing Care Preferences and Responsibilities

Some families imagine aging in place. Others are open to community-based living. There’s no one-size-fits-all approach, but there is a better outcome when your family knows what matters most to you. Clarify expectations early to help your family avoid confusion or conflict later.

Here are a few starting points you might consider:

• Would you prefer to stay at home as long as possible?
  
  
• Are there specific facilities or types of care you’re comfortable with?
  
  
• If needed, who would you trust to help coordinate care decisions?

And here’s an often-overlooked step: Visit local care facilities in advance. Touring assisted living communities while you’re healthy allows you to get a feel for what’s available, ask questions, and understand the costs and amenities. You may even find one that feels right, making the decision easier for you and your family down the road.

Preparing Key Legal Documents

Alongside the conversation, make sure your legal and medical preferences are clear. A few key tools include:

• A medical power of attorney or healthcare proxy to designate someone to make decisions on your behalf.
  
  
• A living will outlining your preferences for life-sustaining treatment.
  
  
• An updated estate plan that reflects your goals and current wishes.
  
  

These documents can speak for you when you can’t and give your family peace of mind when they need it most.

‍

Building Confidence in Your Future

Planning for long-term care may not be the most comfortable part of your financial journey. But as life expectancy increases, long-term care planning is a critical piece of protecting the life you’ve built, the people you love, and the future you still want to enjoy.

As costs of care have risen in recent decades, different strategies to plan for those costs–each with pros and cons–have risen in popularity. Our central belief is that when long-term care planning is integrated into your broader financial picture, it doesn’t feel like a separate challenge. It becomes part of a larger plan that already supports your values and goals.

You don’t have to have all the answers today. But starting the conversation can be a powerful act of care for your future self and your loved ones. If you’re in your 50s or 60s, now is the right time to think through these questions. Because at Wealthquest, our “All Under One Roof” approach aims to simplify the complexity of your retired years so you can face the future with confidence.

‍