Savvy Tips Guru

Tips On How to Protect Retirement Savings from Nursing Home Costs

how to protect retirement savings from nursing home

Nursing home costs can significantly impact your financial stability during retirement. Learning how to protect your retirement savings from nursing home expenses is crucial for preserving your hard-earned money.

Are nursing homes expensive?

Nursing homes are important places where older folks who need extra help can live. But getting this kind of care costs a lot of money. The price tag for staying in a nursing home can be different depending on where you are, how much help you need, and what kinds of services the facility offers. On average, it can be anywhere from $7,000 to $10,000 every month.

This money covers a bunch of things like a place to stay, medical care, help with everyday tasks, managing medications, and activities to keep residents engaged. Sometimes, if someone has special health needs like Alzheimer’s, there might be extra costs.

For many families, paying for nursing home care is hard. If you don’t plan or have insurance to help with long-term care, paying these bills can use up all your retirement savings fast. This can leave you and your family feeling worried about money and what will happen in the future.

Can nursing homes take your savings?

Nursing homes can’t take your money directly, but staying in one is expensive and can drain your savings fast. If you can’t afford it, you might turn to Medicaid, a government program for low-income people that helps cover medical bills, including nursing home costs.

But getting Medicaid is tough. You need to meet strict rules about your money and income. They even check your finances for the past five years to see if you’ve given away any money to qualify. If they find anything, you might have to wait longer for help and pay for nursing home care yourself during that time.

Understanding all these rules and keeping your money safe can be hard. Talking to a money expert or a lawyer who knows about this stuff can help. They can give you advice on protecting your savings while still getting the care you need. Being careful with your money can ease the worry of nursing home bills and keep things calm for you and your family.

What else can they do if you can’t pay?

If someone can’t pay for nursing home care, it can lead to some tough situations aside from your assets being taken: 

  • Eviction Threats: The nursing home might say they’ll kick you out if you can’t pay your bills. This can make people worried and unsure about where to go next.
  • Legal Trouble: If you don’t pay your bills, the nursing home might take legal action against you. They could sue you to get the money they’re owed. This could mean they try to take your stuff or money to pay off what you owe.
  • Getting a Money Manager: If someone can’t handle their own money, the nursing home might step in and take control. They might become the person who gets your Social Security or pension money to make sure they get paid. But this could also lead to problems if they’re not careful with your money.

What can you do to protect your retirement savings from nursing homes?

To protect your retirement savings from nursing home costs, try these strategies: 

  1. Long-Term Care Insurance: Get insurance that covers nursing home expenses. It might cost a lot, but it can help save your savings in the long run.
  2. Irrevocable Trust: Put your assets into a trust that you can’t change. This way, they won’t count as part of your money if you need Medicaid to help pay for nursing home care.
  3. Medicaid-Compliant Annuity: Turn your assets into a type of income plan that Medicaid approves of. This can help you qualify for Medicaid coverage while keeping some of your money safe.
  4. Life Estate: Set up an arrangement where you can keep living in your home until you pass away, with someone you trust getting the house afterward. This can protect your home from being used to pay for nursing home bills.
  5. Power of Attorney (POA): Choose someone you trust to make financial decisions for you if you can’t. This way, your money will be managed responsibly.
  6. Direct Deposit and Electronic Statements: Have your money sent directly to your bank account, and get your bank statements online. This reduces the chance of someone stealing your money or identity.
  7. Avoid Nursing Home Control Over Finances: Don’t let the nursing home control your money or benefits. Keep control yourself or ask someone you trust to help you manage your finances.

How do you prepare for the cost of nursing homes in the future?

Planning for nursing home costs is important for people of all ages. For younger folks, doing things now can help avoid money troubles later. Here’s what you can do: 

  • Start Saving Early: Put money aside for retirement as soon as you can. Regularly add to retirement accounts like 401(k)s and IRAs to let your money grow over time.
  • Invest in Health Savings Accounts (HSAs): If you have a high-deductible health plan, think about putting money into an HSA. It saves you taxes and lets you use the money tax-free for medical expenses, including long-term care.
  • Consider Long-Term Care Insurance Early: Look into getting long-term care insurance while you’re young and healthy. Buying it early means paying lower premiums and having coverage for future long-term care needs. This insurance helps cover the expensive costs of nursing home care and gives you peace of mind.
  • Engage in Regular Financial Planning: Get help from a competent financial advisor to make a retirement plan that includes money for long-term care. Regular meetings with your advisor can help you see where you stand financially, set goals, and make plans to reach them. They can also help you manage risks and plan for your estate to protect your money and have a secure retirement.
  • Stay Healthy: Take care of your health to lower the chances of needing nursing home care later on. Being active, eating well, and getting regular check-ups can help prevent or delay health problems that might need long-term care. Staying healthy now helps you save money on medical bills later and enjoy a more comfortable retirement.

Don’t let your assets suffer because of nursing home costs

Strategize to protect your retirement savings from nursing home expenses by considering options such as long-term care insurance, irrevocable trusts, and Medicaid-compliant annuities. Begin planning early and maintain control over your finances to avoid future financial stress. With proactive preparation, you can secure your financial future and enjoy retirement without the burden of nursing home fees.


  • RJ Sinclair

    RJ is our resident money guru, with a knack for keeping finances neat and organized. With previous experience as a budget manager in supply chain companies, he brings a wealth of knowledge and expertise to the table. Count on RJ as a trustworthy source for valuable money tips and advice to help you make the most of your financial journey.