After a divorce, especially divorce after 50, long-term care planning is critical. Chronic health problems become more common as we age and are more difficult to manage without a live-in partner.

Women are especially at risk

Research shows that women have good reason to be particularly concerned about long-term care needs compared to men.

• On average, women live nearly 6 years longer than men, making them more likely to reach an age where they may require long-term care. 
• Women aged 65 or older have a 75% chance of needing long-term care services in their lifetime, compared to 64% of men.
• Women also tend to need long-term care services for a longer duration (3.7 years on average) compared to men (2.2 years). 
• Women make up over 70% of nursing home residents and 75% of those receiving assisted living services.
• Women are often caregivers themselves and well-aware of the challenges of elder care.

The high cost of long-term care

Age-related long-term care services are not covered by traditional health insurance or Medicare, which pay only for short-term, rehabilitative care.

So, what does it cost? Here are the average figures for the United States:

• $5,900 per month for assisted living communities
• $6,483 per month for home health aide services (44 hours per week)
• $10,646 per month for nursing home care (private room)

Click here to see the average costs in your state.

How to protect yourself

Addressing your long-term care needs requires a holistic approach that considers all your financial resources as well as your overall health and social support. Three financial strategies can set you up for success:

1. Build up retirement savings. Even if you have already accumulated for retirement, you may be able to build those assets even more, not only for supplemental retirement income, but also as a resource for long-term health care. An experienced CFP® Professional can help you project the likelihood of meeting these needs over your lifetime and set up a systematic savings plan.
2. Earmark a potential inheritance. Will you be the beneficiary an estate in the future? If so, these funds could be earmarked and managed specifically for long-term care needs.
3. Tap into home equity. The equity value of your home can be an excellent source for funding long-term healthcare expenses, especially if you have a mortgage that will be paid off before age 75. There are several ways to strategically tap this resource later in life.
   • Sell and relocate: Your housing needs will likely change as you age. Selling your home provides the opportunity to convert excess home equity to liquid savings or investments. And moving into a more practical home or senior living community could be a better fit for your budget and lifestyle.
   • Refinance the house: Depending on terms and interest rates, refinancing can give you access to cash and potentially lower your monthly mortgage bill.
   • Reverse Mortgage: This is a more complex strategy but potentially useful if you expect to stay in your current home for most of your life. Reverse mortgages are often pitched as the “best of all worlds”, but consumers should tread carefully. A reverse mortgage can be an expensive way to borrow and can also limit your options if you decide to move.

What about long-term care insurance?

If you are in good-to-excellent health, obtaining a long-term care insurance policy may be a viable option. Policies typically cover all levels of care whether at home or in a facility.

Benefits are paid if you meet the policy definition of having a cognitive impairment or require assistance in performing two of five activities of daily living which are eating, bathing, dressing, continence, transferring in and out of a bed or chair, and toileting. Policies typically have a waiting period, where the insured must pay out-of-pocket for a period (such as 90 days) before the policy benefits kick in.

According to the 2024 American Association for Long-Term Care Insurance (AALTCI), the average annual premium for a $165,000-benefit policy is $1,200 for 60-year-old male. For a 60-year-old female, the average cost is $1,900 (58% higher than rates for men).

While these prices may seem affordable, inflation can erode the value of the policy by the time care is needed 20 years or more down the road. To maintain purchasing power, purchase a policy can with an inflation protection feature that increases the benefit amount annually. This, however, raises the insurance expense dramatically. Using the same example above, a 5% annual benefit increase raises the cost for a 60-year-old male from $1,200 to $3,800 per year. For a 60-year-old female, the cost rises from $1,900 to a whopping $6,700 per year.

Moreover, qualifying for coverage can be difficult. In fact, 30% of applicants aged 60-64 are turned away for health reasons. As such, the best time to buy long-term care insurance is before the onset of chronic health conditions such as arthritis, high blood pressure, and so on.

If a divorcing couple already has long-term care insurance, the policy should be analyzed carefully as part of the divorce settlement process.

Click here to Download our After Divorce Guide

Housing and Lifestyle Strategies

Now that we have covered the risks, costs, and strategies to protect yourself for a long-term care event, here are a few ideas worth exploring to help you navigate the aging process:

• Senior living communities. Seniors have a wide range of housing options. At one end of the spectrum is 100% independent living at home. At the other end is 100% confinement to a nursing home. Senior living communities fall somewhere in the middle. Residents typically live independently in their own apartment and enjoy social activities, meal services, and housekeeping. Living in such a community provides a measure of safety since there are neighbors and staff around in the event of a health issue or other emergency. Social connections also provide the opportunity to avoid isolation and maintain independence as long as possible.
• Home modifications. Equipping the home with accessibility and safety features can support “aging in place”. Such modifications could even include accommodations for a live-in caregiver or roommate.
• Invest in health and wellness. Living a healthy lifestyle helps postpone the need for assistance as long as possible. This not only improves quality of life. It also gives your investment and home equity dollars more time to accumulate.
• Build your network. Cultivate a strong support system of family, friends, or professionals who can assist with health care decisions and caregiving. 

Government assistance

State-funded Medicaid programs provide a safety net for those who have no other options. Many counties also provide senior services such as meals, wellness visits, transportation and adult daycare.

Get professional guidance

In summary, there is no one-size-fits-all approach to planning for long-term care. Every potential solution requires a commitment of energy, time or money. A Certified Financial Planner (CFP®) or Certified Divorce Financial Analyst (CDFA®) can help you assess your options and use your resources wisely.

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Schedule a call with one of our Certified Divorce Financial Analysts™ (CDFA®) professionals today!

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