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  • Writer's pictureHarry N. Stout

245- The Missing Bucket!

Written by: Cary Carney, Vice President of Sales at Kuvare, Guaranty Income Life Insurance Company, a Kuvare company.

Financial professionals often use a common strategy to help you plan for financial security. This methodology has many names; however, a common one is the three-bucket strategy.

The first bucket is accumulation, where a portion of assets is used to build your retirement nest egg. The second bucket aims to provide an income stream to ensure you don’t outlive your money. The third, and typically final bucket, is life insurance to leave dependents enough resources for their lifetimes should you pass away prematurely.

This is a very good strategy and typically can do a nice job to protect you and provide an opportunity to become financially secure. The only issue with this strategy is that it misses one additional bucket for long-term care (LTC) expenses.

If you live to age 65, you have a 70% chance of needing LTC in your lifetime. This statistic was prior to the COVID-19 pandemic. No one knows the long-term impact for a person who has recovered from this virus. However, my sense is that LTC needs will increase in the next 10-15 years and potentially the need may extend to people younger than age 65. This is not a scare tactic, just something to think about.

If, prior to the pandemic, you had a 70% chance of needing LTC, that in and of itself should provide the evidence of the need for LTC insurance to protect your assets. As of early 2020, only 7.5 million people in the United States held some type of LTC insurance, according to the American Association for Long Term Care. There’s quite a discrepancy between the number of people who may need LTC compared to those who have LTC insurance.

You work most of your life to build a nest egg, protect your dependents in case you die prematurely and insure you have an income stream at retirement. Therefore, why wouldn’t you protect those resources from a potential LTC event that could eat up your entire savings in just two or three years, maybe less?

According to, which used Genworth’s cost of care survey, the price for a private nursing home room is nearly $105,000 per year, while semiprivate rooms are around $93,000 annually. If you have $500,000 saved, five years of nursing home care would fully deplete this amount. That doesn’t include utilizing any of those funds for living expenses for a spouse or other family members. It’s scary to realize you have worked an average of 45-50 years to potentially drain your nest egg in less than five years.

Remember, you need not live in a nursing home to use most LTC benefits. Oftentimes, you can utilize them for in-home care needs as well as assisted living. If you fall and break a hip you may require care for three months or six months and can use benefits from many LTC policies to help pay for that care as well.

When planning for your future, make sure to ask your financial professional about the fourth bucket, LTC. In many cases, it is as important as the first three buckets!


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