Analysts say couples will need an estimated $280,000 to cover health-care costs in their retirement. That’s a 2% increase from last year’s estimate.[I]

Recent research paints a bleak financial picture of retirement for many Americans.[ii] More than 20% of Americans have no retirement savings and a third of baby boomers have less than $25,000 saved. A recent survey concluded that 78% of Americans are “extremely” or “somewhat” worried about having adequate resources to afford a comfortable retirement.

More Americans say they plan on relying on Social Security to fund their retirement.[iii] Some experts predict Social Security will become insolvent by 2034 if Congress doesn’t provide additional funding.[iv]

According to some estimates, if you started collecting benefits at the age of 62 and lived until the age of 90, you’d collect about $471,000.[v] Medicare typically covers 20% of your medical bills.[vi]

Substract the estimated health-care costs by the total in Social Security benefts and retirees may be left with $191,000 over the course of their retirements.

Long-term care insurance may provide the bridge to help people pursue successful retirements. Here are some ways it may help you manage your finances in retirement.

  1. Cover costs associated with chronic illnesses

Long-term care insurance helps cover treatment costs for chronic diseases, such as arthritis, heart attacks, stroke, cancer, diabetes, and epilepsy.[vii] Insurance, for example, may cover the costs for caregivers to help with bathing and dressing or stays at rehabilitative or assisted living facilities.[viii]

Here are the average annual national costs for various types of elder care:[ix]

  • Assisted living and memory care: $45,000
  • Nursing home: $82,855
  • Home care aide: $40,000
  1. Help fill coverage gaps

Long-term care insurance will also help retirees fill the health-care gap Medicare doesn’t cover.[x] Medicare typically pays around 62% of out-of-pocket health-care costs.[xi] Private insurance on average pays about 13% of medical expenses. That leaves retirees 13% in out-of-pocket medical expenses.

Long-term care insurance works in conjunction with Medicare to fill those unforeseen coverage areas without affecting Medicare eligibility.[xii]

  1. Receive a tax break from buying it

Tax incentives are available for those who buy long-term care insurance.[xiii] Federal and many state tax codes provide tax benefits to those who get care insurance. The Health Insurance Portability and Accountability Act of 1996 established provisions for favorable tax treatment for those with qualified insurance. For more information about qualified providers, go to

The IRS allows taxpayers to deduct medical expenses that include the amounts they pay for long-term care insurance.[xiv] Taxpayers may not deduct premiums for long-term care insurance if the premiums were paid with tax-free distributions from retirement plans paid directly to insurance providers.

If you would like to discuss adding long-term care insurance to your plan or review your current policy, we’re more than happy to talk.