The Conference Conversation on Long-Term Care and Spending Fears

During a panel at the 2026 Morningstar Investment Conference, Morningstar’s Christine Benz sat down with Dana Anspach of Sensible Money and Michael Finke of The American College of Financial Services to tackle one of the most anxiety-inducing topics in retirement planning: the potential for devastating long-term care costs. Both experts acknowledged that the fear of a large, unplanned expense late in life can cause retirees to hold back on spending — even when their financial projections say they could afford to enjoy their savings.

Anspach explained that she builds long-term care events directly into clients’ retirement projections, stress-testing what would happen if a multi-year care need struck in their early 80s. The outcome of that analysis drives whether she recommends long-term care insurance. Even when a client could self-fund a care event, she often still raises the insurance conversation, pointing to research indicating that people with coverage are more likely to seek out and receive higher-quality care rather than “make do.”

Finke addressed the common misconception that almost everyone will end up in a nursing home, noting that the data tells a different story. While Medicare covers the first three months of skilled nursing care, the risk of a truly catastrophic expense — a stay lasting more than a decade — is concentrated among a minority of households. That concentration makes long-term care an insurable risk, not a certainty that requires hoarding assets. He acknowledged the well-known problems in the traditional long-term care insurance market, where premiums have risen and policies have been difficult to keep, and said he believes the hybrid products that combine coverage with life insurance or an annuity are an increasingly attractive alternative.

Separating Long-Term Care Realities from the Myths

The Misconception That Everyone Ends Up in a Nursing Home

Finke directly challenged the idea that a prolonged nursing home stay is a near certainty. Data shows that most people will never experience the kind of multi-year confinement that destroys a portfolio. The cost that does arise is often limited to a few months and can be partly covered by Medicare’s skilled nursing benefit, leaving a manageable gap. By treating the risk as an all-or-nothing inevitability, investors may unnecessarily restrict their spending throughout retirement. Recognizing that only a fraction of households face the tail risk changes the math: it becomes a question of whether to insure against that low-probability, high-impact event rather than simply saving for it outright.

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Why Anspach Stresses Insurance Even for Those Who Can Self-Fund

Anspach’s practice highlights a nuance that goes beyond pure numbers. Even after stress-testing shows that a client’s assets could survive a long-term care event, she raises the possibility of insurance. Her reasoning is behavioral: individuals who have a defined benefit in place are more likely to use it to access better care, rather than defaulting to a spartan option out of a desire to preserve assets for heirs. This perspective suggests that the value of long-term care insurance may include not just financial protection, but also the peace of mind that enables better health outcomes.

The Shift Toward Hybrid Long-Term Care Products

The discussion confirmed that the traditional, stand-alone long-term care insurance market remains troubled. Premium increases and policy lapses have made it a difficult product to rely on. Both experts acknowledged that financial professionals are increasingly interested in hybrid products that embed long-term care benefits inside life insurance or annuity contracts. These structures can be easier for clients to accept because they feel like they are buying a death benefit or an income stream with the care rider as an add-on, rather than paying for a policy they might never use. While they are not a perfect solution for everyone, the behavioral appeal and the elimination of the “use it or lose it” concern are significant advantages.

Steps to Put Long-Term Care Planning into Practice

  • Stress-test your own plan. Use retirement calculators or work with an advisor to model what would happen to your assets if a long-term care need of two, three, or five years began in your early 80s. This exercise clarifies whether you can self-fund, need insurance, or would be wiped out.
  • Don’t confuse what Medicare covers with what you still owe. Medicare pays for up to 100 days of skilled nursing care under specific conditions, but it does not cover long-term custodial care. Know the gap and plan for it explicitly.
  • If you’re considering insurance, compare hybrid policies. Evaluate life insurance or annuity products that offer a long-term care rider. Because you pay for a core benefit you will use (a death benefit or income), the premiums may feel less wasted if you never need care, and the product avoids the behavioral trap of lapsing a stand-alone policy.
  • Recognize that the risk is concentrated, not universal. Don’t let the fear of a catastrophic event paralyze your spending if the data show that a multi-year nursing home stay is a tail risk for a minority. A targeted insurance solution can free you to spend more confidently on things that matter throughout retirement.
  • Factor in the quality of care, not just the cost. Anspach’s point about insurance leading to better care choices means that even those with sufficient assets should weigh whether a policy would make them more willing to seek out the facility or home care that maintains dignity and health, rather than the cheapest acceptable option.