Posted inLong Term Care Planning

Protecting Your Retirement Nest Egg

After decades of hard work and financial discipline, a period of long-term care can destroy a retirement nest egg and the odds are not in your favor. According to the Department of Health and Human Services 70 percent of adults age 65 and older will eventually need some type of long-term care and nursing home costs can be significant.  Studies show the median cost of nursing home care in Nebraska is $69,076 for a semi-private room and $73,584 per year for a private room.

So, what can you do – get informed, take action and put a plan in place. Don’t just wait and see how life unfolds.

The key to planning for long-term care is to act NOW rather than to react later. Unless you have a well-designed strategy should you or your spouse become a long-term care statistic, then your retirement nest egg is at risk. Your long-term care plan should be treated at the same level of importance as your retirement investment and income strategy.

The typical financial plan during our working years will focus on playing “offense” and growing retirement dollars. As we near or enter retirement many times the strategy will switch towards an income rather than growth. Estate Planning then contemplates how we want things to be handled upon our death.

I view “long-term care planning” as a blend of financial retirement planning and estate planning. There is certainly a significant segment of the retired population and the baby boomers closing in on retirement that do not have enough assets to withstand an extended period of long-term care costs. If you fall into this category, then you should consider an “asset preservation” strategy for some portion of your retirement nest egg.

Preservation Strategy

A “preservation” strategy can mean many things. For someone with a strong enough retirement income, one strategy may be to insure your retirement financial security through long-term care insurance. However, your health is what buys you long-term care insurance. So, don’t procrastinate until you have a change in health, or this option may not be available.

For others that feel they can’t afford the additional monthly premium for long term care insurance, a preservation strategy may mean investing a portion of your retirement portfolio in a “hybrid” type account that accrues interest but also has a built in long-term care and/or death benefit.

Beneficiary Designation

If you have a qualified retirement account (like a 401(k) or IRA) or life insurance, choosing your beneficiary at your death is an important financial decision. However, most people give very little thought to this issue – they complete the initial application and then years later they can’t remember the choice they made. Should the beneficiary be their spouse? Should it be someone else or what about a trust? What are the tax implications involved, is it possible to preserve the assets that will pass pursuant to the beneficiary designation for the benefit of the surviving spouse and be protected from long-term care costs?

Medicaid Planning

But what if you can’t afford the premium or your health prevents you from insuring your long-term care risk? If you do not have the resources to pay for long-term care and the risk is not insured, then long term care planning will involve structuring your assets so you can qualify for Medicaid assistance when long-term care is needed without first becoming impoverished.


There are many legitimate legal strategies that can help preserve more of your assets, but this is not the time to learn by “trial and error” or your own experience. The counsel of a knowledgeable elder law attorney can be extremely beneficial in planning for your future. It can mean the difference between enjoying your retirement and worrying about how you will get by if something unfortunate occurs to your or your spouses health.