Personal Savings

Many individuals use their personal savings, investments, pensions, and other assets and income sources to fund long term care. Because long term care is expensive, this may be a viable option only for those with above-average financial resources who’ve planned long in advance of the need for care. Even then, if you need specialized or long-lasting care, a large amount of personal savings may be necessary.

To set up a savings program, start with a monthly budget and allocate a certain percentage each month to your savings. This will require self-discipline but you’ll quickly see the results of your work. Talk to a financial planner for more ideas about building your savings. Use our retirement savings and retirement budget worksheets for planning.

Advantages Disadvantages
If it turns out that you don't need long term care, your money is still yours to spend, invest, or leave to your heirs. Because you don’t know how much long term care you’ll need or how much it’ll cost, you might not save enough money to pay for all of it.
If you set aside enough money for your long term care needs, you can choose where and how you receive care. There may be rules about when and how you can use your investments. In some cases, you may have to pay a penalty for withdrawing money.
You don't have to worry about qualifying for a long term care insurance policy or purchasing a long term care policy that you may never use. If you need extensive long term care, you might run out of money and find yourself unable to medically qualify for insurance.
You don’t have to worry about age or health screening or requirements. Saving requires discipline over an extended period of time. Each month or year, you will need to make sure you put away your planned amount.