What Aunt Alice’s story reveals about protecting your retirement
To protect her family’s privacy, I’ve changed her name and omitted identifying details.
Aunt Alice never expected to become the reason I wrote this article. She is in her early 70s. Healthy. Independent. Financially secure. By almost every measure, she has done everything right. Her home is paid for. She has roughly $1 million saved in her IRA, she loves to travel, and she spends weekends with family. Until recently, she was living what many people imagine retirement should look like.
Years earlier, Alice purchased a traditional long-term care insurance policy. Like many people, she eventually began questioning whether it was worth the cost. The premiums continued to increase. She had never filed a claim. She wondered if she should simply stop paying, let the policy lapse, and self-insure.
Then one morning, everything changed.
Alice was dog sitting for a friend. Her neighbors noticed something unusual. She had not been outside to walk the dog. They knocked on the door. No answer. They called 911.
Alice had suffered a massive stroke. She is preparing to begin intensive rehabilitation. Within hours, her family’s life became a whirlwind of emergency rooms, rehabilitation hospitals, Medicare rules, power of attorney documents, therapy schedules, and difficult conversations about what came next.
Suddenly, no one was asking whether the insurance premiums had been worth it. They were asking how they were going to coordinate her care, protect her assets, and make the best decisions possible during one of the hardest moments of her life.
The long-term care policy did not prevent the stroke. It isn’t changing what happened. But it is giving Alice and her family options at a time when they need them most. When I asked Alice’s niece whether her aunt regretted keeping the policy, she said two things.
“Thank God the neighbor called 911. And thank God she kept that policy.”
The conversation reminded me that the real question is much bigger than insurance. How much financial risk are you willing to keep, and how much would you rather transfer before life forces the decision for you?
As a CERTIFIED FINANCIAL PLANNER® professional, I help families answer that question every week. Financial planning, however, is only part of the story. To understand what long-term care actually costs today, I asked Jen Franks of Genwin, an affiliate of Capital Investment Advisors, who works with seniors and their families throughout Metro Atlanta, to share what she sees every day. To understand how insurance fits into the picture, I asked Jeremy Bird of Arthur J. Gallagher to walk through how today’s hybrid long-term care policies are designed and what they can realistically accomplish.
Together, those conversations produced one conclusion. Long-term care planning is not about fear. It is not about selling insurance. It is about protecting the retirement you’ve spent a lifetime building.
Before you decide whether to self-insure or purchase long-term care insurance, let’s start with the question that matters most. What is the financial risk you’re actually trying to solve?
What Does Long-Term Care Really Look Like?
When people hear the words “long-term care,” they usually picture a nursing home.
That image keeps many people from planning appropriately because it oversimplifies what actually happens. According to Jen Franks, most families never go directly from independent living to skilled nursing. Care usually unfolds over time. It often begins with a few hours of help around the house. As needs increase, home care becomes more frequent. Eventually assisted living may provide a safer environment. If cognitive decline develops, memory care may become necessary. Only some people ultimately require skilled nursing.
In other words, long-term care is usually a journey, not a single event. That distinction matters because each stage carries different costs, different emotional challenges, and different planning opportunities. When families understand how care typically progresses, they stop asking, “How much does a nursing home cost?” They begin asking a much better question. “What might our care journey actually look like?”
How Much Does Long-Term Care Cost?
National averages make headlines. They are not particularly useful when you are trying to build a financial plan.
Costs vary dramatically depending on where you live, the level of care required, and the community you choose. Rather than relying solely on national surveys, Jen shared the planning ranges she sees families working with throughout Metro Atlanta today.
- Home care often ranges from approximately $5,400 to $8,200 per month, depending on the number of hours needed.
- Assisted living typically falls between $4,500 and $7,000 per month, while luxury communities frequently exceed $10,000 per month.
- Memory care generally ranges from $6,500 to $9,500 per month, with higher need residents sometimes exceeding $10,000 each month.
- Skilled nursing commonly ranges from $9,500 to $15,000 per month, depending on whether a private room is selected.
When families see these numbers, the conversation almost always changes. They surprise almost everyone. What surprises them even more is that many communities charge additional fees based on the level of care a resident requires. Residents often pay additional monthly charges based on the level of assistance they require with activities such as bathing, dressing, medication management, transferring, eating, or cognitive supervision.
The more assistance someone needs, the more expensive care becomes.
When you multiply those costs over several years instead of several months, long-term care quickly becomes one of the largest financial risks many retirees will ever face.
Why Inflation Is the Number Most People Ignore
Suppose you estimate that a future care event could cost your family approximately $400,000.
That sounds like a large number. Now imagine you are 60 years old today and care does not begin until your mid-80s.
Healthcare inflation doesn’t just affect hospitals. It affects caregiver wages, staffing, insurance, food, utilities, and virtually every expense involved in providing care. By the time you actually need care, today’s $400,000 problem could be dramatically larger. That’s why Jeremy Bird encourages clients to focus less on today’s premium and more on tomorrow’s purchasing power.
A policy that looks adequate today may not provide enough protection 20 years from now if benefits do not keep pace with rising care costs. Whether you ultimately purchase insurance or decide to self-insure, every financial plan should account for the fact that future healthcare costs may be substantially higher than today’s prices.
Should You Self-Insure for Long-Term Care?
Many successful retirees tell me they plan to self-insure. Sometimes they are absolutely right. Sometimes they have never actually done the math. Those are two very different things.
Self-insuring does not mean hoping nothing happens. It does not mean believing your investments will continue growing forever. It does not mean assuming Medicare will cover extended care.
Self-insuring means intentionally deciding that your existing assets and future income are sufficient to absorb a significant long-term care event without changing the retirement lifestyle you want for yourself or your spouse. That requires answering some difficult questions.
- If one spouse needs care for five years, which assets will pay for it? Will those assets still be available if the market declines at the same time?
- Will selling investments increase your taxes?
- Will your surviving spouse still have enough income?
- Will you have to sell real estate or a family business?
Those questions are far more important than simply saying, “We’ll self-insure.” Because self-insurance is not a philosophy. It is a financial strategy.
When Does Long-Term Care Insurance Make Sense?
There is a common misconception that long-term care insurance is only for people who cannot afford care. In my experience, many of the people who purchase coverage are financially successful. Not because they need an insurance company to pay every dollar of future care. Because they want to transfer part of the risk.
Jeremy Bird describes today’s hybrid policies as another planning tool. Much like life insurance or disability insurance, the goal is not to create a profit. The goal is protecting everything else you have worked to build. Insurance often makes the most sense when a significant care event could materially affect a surviving spouse’s lifestyle, force the sale of investments during unfavorable market conditions, or disrupt estate planning goals.
For many families, the goal isn’t to insure every possible dollar of risk. It’s to protect the spouse who still has to live with the financial consequences. It also appeals to many families because modern hybrid policies provide a death benefit if long-term care is never needed. For some people, that makes the decision psychologically easier than purchasing traditional long-term care insurance.
The question is no longer whether the premiums disappear if they never file a claim. The question becomes whether transferring part of a potentially six or seven figure financial risk is worth the premium required to do it.
A 4-Step Framework for Helping Decide: Insure or Self-Insure?
Every family is different, but this is the same framework I use to help clients evaluate whether they should self-insure or transfer some of the risk. The question is not whether long-term care is expensive. The question is whether it represents a meaningful risk to your retirement. After years of working with retirees, I have found that most planning conversations become much clearer when you follow four simple steps.
Step 1. Estimate a Realistic Care Event
Planning begins with realistic assumptions, not worst-case scenarios. Based on current Metro Atlanta costs and the care journeys Jen Franks sees most often, I generally stress test two scenarios.
- A three-year physical or medical decline that costs approximately $350,000 in today’s dollars.
- A five-year cognitive decline that costs approximately $600,000 in today’s dollars.
The point is not predicting the future with perfect precision. The point is understanding the size of the financial risk.
Step 2. Adjust for Inflation
Once you estimate today’s cost, ask what that same event might cost 20 or 25 years from now.
Healthcare costs rarely stand still. Neither do wages for caregivers.
Communities continually adjust pricing as labor, insurance, food, utilities, and medical expenses rise. This is why Jeremy Bird spends so much time discussing inflation protection when evaluating long-term care policies.
The policy you purchase today is designed to protect the 85-year-old version of yourself. Not the 65-year-old version.
Whether you ultimately purchase insurance or self-insure, every financial plan should assume future care will cost substantially more than it does today.
Step 3. Compare the Risk to Your Net Worth
This is where planning becomes personal. Here’s the question that matters:
What percentage of my future retirement assets could one care event consume?
- If the answer is 15%, self-insuring may be perfectly reasonable.
- If the answer is 40%, the conversation becomes very different.
The objective is not preserving every dollar. It is protecting the retirement lifestyle you and your spouse have spent decades building.
Step 4. Decide Whether the Premium Is Worth the Risk Transfer
Insurance is not an investment in my opinion. It is risk management. The decision ultimately comes down to values.
Would paying predictable premiums today help you sleep better knowing that a significant portion of future care costs has already been addressed?
Or would you rather retain complete control of your capital and accept the possibility of paying for care yourself?
Neither answer is universally correct. The right answer depends on your assets, your health, your family history, your retirement income, and your tolerance for uncertainty.
Aunt Alice Changed the Conversation
Remember Aunt Alice? She questioned whether her policy was worth keeping until the day she needed it. Her story illustrates why long-term care planning isn’t really about insurance. It’s about protecting your family before life makes the decision for you.
Traditional vs. Hybrid Long-Term Care Insurance: What’s the Difference?
If you decide insurance belongs in your plan, the next question becomes which type of policy makes the most sense. Traditional long-term care insurance is designed specifically to reimburse qualified long-term care expenses. If you never need care, no death benefit is paid.
Hybrid policies combine life insurance with long-term care benefits. If long-term care is never needed, your beneficiaries generally receive a life insurance death benefit.
Jeremy Bird has found that many affluent families gravitate toward hybrid policies because someone ultimately receives value, whether through long-term care benefits or a death benefit. People like knowing that someone benefits from the premiums even if long-term care is never needed.
Neither approach is inherently better. Each serves a different planning objective. The important thing is selecting a policy because it fits your overall financial plan, not because it happened to be the product someone was selling.
Can You Combine Self-Insuring and Long-Term Care Insurance?
One of the biggest misconceptions in long-term care planning is believing the decision has to be all or nothing. It does not.
Many retirees choose to insure the initial years of care while using their own assets to cover anything beyond that. Others purchase smaller policies designed to reduce the financial impact of a major claim rather than eliminate every possible dollar of risk. That approach often creates the best balance between flexibility and protection.
Planning rarely requires perfection. It requires preparation.
5 Questions to Ask Before Buying Long-Term Care Insurance
Before deciding to purchase long-term care insurance or self-insure, sit down and answer these questions honestly.
- What would long-term care cost where you expect to live?
- If you are married and needed care for several years, what would happen to the surviving spouse’s retirement?
- Which assets would you use to pay for care?
- Would paying for care require selling investments or real estate you hoped to keep?
- Would transferring part of this risk improve your financial confidence?
If you cannot answer those questions today, that is perfectly okay. It simply means the planning conversation has not happened yet.
The Bottom Line
Long-term care planning is not really about insurance. It is about protecting the people you love.
Some families have enough assets to comfortably self-insure. Others decide that transferring part of the risk through insurance better protects the retirement they’ve worked a lifetime to build. Neither approach is automatically right. The important thing is making the decision before a health crisis makes it for you.
The best plans are usually made years before they are needed. That is why I believe long-term care planning deserves the same attention as retirement income planning, Social Security decisions, tax strategy, and estate planning.
Hope is not a financial plan. Preparation is. The best time to make long-term care decisions is when they’re still hypothetical, not when they’re happening to your family.
If you have any questions or if you’d like help thinking through what this means for your own retirement, fill out the form below to schedule a conversation with our team.
Download The Long-Term Care Planning Playbook
If you’re serious about making this decision, don’t stop here. We’ve assembled the same planning framework I use with clients, combining financial planning, senior living experience, and long-term care insurance design into one practical resource.
About the Author
James Lewis, CFP® is a Senior Investment Advisor with Capital Investment Advisors and founder of Retire SouthernTM. He specializes in retirement income planning, tax strategy, Social Security optimization, and helping families make complex financial decisions with confidence.
This guide also includes insights from:
Jen Franks
Senior Living Specialist, Genwin
Jeremy Bird
Long-Term Care Insurance Specialist, Arthur J. Gallagher
If you want to go deeper, I invite you to download The Long-Term Care Planning Playbook: A Practical Framework for Deciding Whether to Self-Insure or Purchase Long-Term Care Insurance.
The guide expands on the ideas introduced here with:
- Current Metro Atlanta care costs provided by Jen Franks of Genwin
- Representative insurance illustrations and planning insights from Jeremy Bird of Arthur J. Gallagher
- A detailed comparison of traditional and hybrid long-term care insurance
- A step-by-step planning framework you can apply to your own retirement
- Inflation examples showing how future care costs can change over time
- Additional planning considerations for couples, affluent retirees, and families navigating aging parents
Whether you ultimately decide to self-insure, purchase insurance, or use a combination of both, my hope is that you make the decision with confidence, using facts instead of fear.
Disclosures
Various planning scenarios are provided for illustrative purposes only. Actual long-term care needs, duration of care, and costs vary significantly from person to person and should not be interpreted as predictions.
Certain estimates are based on current observations in the Metro Atlanta market and are subject to change. Actual costs vary based on location, provider, level of care, and future inflation.
This article is provided for educational and informational purposes only and should not be construed as personalized investment, tax, legal, insurance, or financial planning advice. Any examples are hypothetical and provided solely for illustrative purposes. Past experiences described herein are not intended to predict or guarantee future results. Decisions regarding long-term care planning should be made after consideration of an individual’s financial circumstances, health status, objectives, and risk tolerance.
Genwin, LLC (“Genwin”) is an affiliated company under common ownership with Capital Investment Advisors, LLC (“CIA”). Although CIA may introduce clients to Genwin when appropriate, clients are free to select any senior living advisor or placement service they choose. No compensation was paid to Genwin or Ms. Franks in connection with this article. Jeremy Bird and Arthur J. Gallagher are not affiliated with or compensated by Capital Investment Advisors. Please consult a licensed insurance professional and your financial advisor before making any long-term care planning decisions. Capital Investment Advisors is an independent registered investment adviser and does not sell insurance products
