The Biggest Hole In Most Financial Plans
My father was 61 when he started showing signs of dementia.
Over the next nine years, my family watched the disease slowly take him from us. That's the emotional reality of dementia.
But there's a financial reality most families don't appreciate until they're living it.
Early on, someone came to the house a few hours each day. Eventually, a nurse was there 24/7. The cost of that kind of care can exceed $10,000/mo. Over nearly a decade, the bills were staggering.
Here's what saved my family: years before his diagnosis, I sat down with my parents and had an uncomfortable conversation about their finances. I helped them put a long-term care insurance policy in place. It covered high-quality care for almost ten years. It allowed my mom to preserve everything they'd spent a lifetime building.
If we hadn't done that, my mother would be broke right now.
And helping her would affect my financial plan. My family's situation isn't unusual.
Nearly 70% of people turning 65 today will need some form of long-term care in their lifetime. One in five will need it for longer than five years.
I have always said that Alzheimer's/dementia is the iceberg to your financial plan's Titanic. Most conditions that require long-term care — cancer, heart disease, stroke — are ultimately fatal. The care period is devastating, but it's typically measured in months or a few years. Dementia is different. You can live with it for a decade or longer. And when care is needed for that long, it doesn't just strain your finances — it can wipe them out entirely.
Yet a 2024 University of Michigan poll found that only 45% of adults 65 and older believe they'll likely need long-term care.
Almost half of adults over 50 said they don't even know how to plan for it.
I like to say that if 40 is the age you need to start getting a prostate exam, then 50 is the age you need to start looking into long-term care insurance.
The sweet spot for coverage is between 45 and 65 — old enough that it's relevant, young enough that premiums are reasonable, and healthy enough to qualify.
Most financial advisors don’t have this conversation with their clients. It's not because they don't care — it's because long-term care insurance is a specialized area with a lot of nuance, and it's easy to skip over.
I've spent 27 years going deep on this with many clients and it is something I am extremely passionate about, because I've lived on both sides of it. I've seen what it looks like when you have a plan, and I know what happens when you don't.
It won't matter how well your investments are performing if you, your spouse, or a parent ends up needing care and you haven't planned for it.
If you or your parents are in the age range I mentioned, this might be worth looking into sooner rather than later. I'll be sharing more on this topic in the future.
