When people talk about retirement planning, the conversation often centers around how to build wealth—through investing, saving, or maximizing returns. But surprisingly little attention is paid to the other side of the equation: how to protect that wealth as you age. In reality, retirement success isn’t just about how much you accumulate, but how well you shield your assets from erosion due to healthcare costs, long-term care needs, fraud, taxes, and poor planning.
Let’s start with one unavoidable truth: around 70% of Americans aged 65 and older will require some form of long-term care in their lifetime. This isn’t a fringe risk—it’s the norm. And yet most people fail to prepare for it financially.
According to Fidelity, the average retired couple will need $172,500 just for out-of-pocket medical expenses over their retirement, a figure that has more than doubled since 2002. But this doesn’t include long-term care expenses such as assisted living, in-home nursing, or skilled nursing facilities—costs that can easily push the total burden past $500,000.
In 2025, the average annual cost of assisted living in the U.S. is around $70,800, while a private room in a nursing home can exceed $127,000, depending on the state. For instance, in Alaska, a private nursing home room can cost over $360,000 annually, while in states like Texas or Missouri, it may be under $70,000. These costs are escalating year-over-year, far outpacing inflation and wage growth.
For middle-class families, these numbers are staggering. A recent Morningstar simulation suggests that about 45% of Americans risk running out of money in retirement, with that number rising to 55% for single women. Couples fare slightly better, but the odds remain uncomfortably high. The takeaway is clear: failing to plan for long-term care is one of the fastest ways to drain a lifetime of savings.
Let’s consider the case of a 70-year-old single woman who recently inherited $130,000. She already had $500,000 in stocks and $220,000 in savings. A financial advisor recommended dividing the windfall into three buckets: a third allocated for long-term care coverage or a dedicated healthcare reserve fund; a third kept as a liquid emergency reserve; and the rest used to enhance her quality of life now.
Alongside these financial steps, she was advised to set up health care proxies, power of attorney, and a trusted contact with her brokerage—simple measures that could prevent significant financial and legal troubles down the road.
One underutilized tool for mitigating healthcare costs is the Health Savings Account (HSA). Despite their triple-tax advantage (tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses), only 23% of Americans have an HSA—and fewer invest the balance. But someone who starts maxing out their HSA contributions at age 35 could accumulate over $500,000 by retirement, including about $140,000 in tax savings, assuming a moderate rate of return. Even those in their 60s can still benefit from HSA contributions and use them strategically for Medicare premiums or unreimbursed medical costs.
Long-term care insurance (LTCI) is another protective tool, though not without controversy. Traditional policies typically cost between $2,000 and $3,600 annually for someone in their mid-50s. Hybrid products, which combine life insurance with LTC coverage, can be more expensive—sometimes $3,500 to $6,000 per year, or a single lump sum exceeding $100,000. Still, these plans can make sense for people with family longevity or a family history of chronic illness.
And yet, planning isn't just about insurance. Creating a dedicated long-term care fund—a separate portfolio segment invested conservatively—can serve the same purpose. For example, if a 62-year-old couple expects to need long-term care 15 years into retirement, they could begin funding a reserve account today, targeting a future value of $300,000–$400,000. This account would follow a glide path toward lower-risk assets as the couple ages.
Delaying Social Security is another highly effective tactic. For each year you delay claiming beyond full retirement age, your benefit increases by about 8% annually. This can be an important inflation-proof income stream, especially for surviving spouses or those expecting long lifespans.
Then there are the structural risks: investment fees, poor asset allocation, and portfolio neglect. Even small fees, when compounded over decades, can reduce total retirement assets by six figures. Using free tools like FINRA’s Fund Analyzer allows investors to compare over 30,000 mutual funds and ETFs and make more informed decisions. Equally important is rebalancing your portfolio at least annually, especially after major market moves or life events.
Don’t overlook fraud protection, either. As retirees age, the risk of financial exploitation grows significantly. According to the FBI, seniors lose more than $3 billion annually to scams. Establishing a trusted contact person with your brokerage—someone who can be notified if you show signs of cognitive decline or uncharacteristic financial behavior—can be a safeguard against disaster. Unlike a power of attorney, this trusted contact has no authority to transact on your behalf but can alert professionals and family members when something’s off.
You should also prepare for diminished capacity by consolidating financial documents, clearly designating fiduciaries, and making sure loved ones know where to find key information. This includes healthcare directives, will and trust documents, and insurance records. These preparations can prevent confusion or disputes later on—and they’re not just for the very old. Cognitive decline can start earlier than many expect, and being prepared is an act of financial self-defense.
One real-life example: a New York couple, both 62, with a $1.2 million 401(k), $150,000 in cash, no mortgage, and a desired retirement lifestyle of about $60,000 per year. The wife retires first, while the husband continues working. Anticipating the possibility that one spouse might require long-term care within 10 years, they work with a planner to implement several measures:
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Purchase inflation-adjusted LTCI policies (~$3,500/year each)
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Establish a long-term care reserve fund (~$250,000)
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Max out HSA contributions while still employed
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Delay claiming Social Security until age 70
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Designate trusted contacts and update legal documents
By layering these tactics, they mitigate multiple risks simultaneously—without sacrificing their lifestyle or peace of mind.
A final note on geography: where you retire matters more than ever. State-specific costs for care, taxes, insurance, and housing can vary dramatically. Choosing to relocate to a lower-cost state or even a different country (for international retirees) can stretch a retirement budget significantly further.
As of now, only a few states (like Washington) offer public long-term care insurance initiatives. But these programs remain controversial and insufficiently funded. It’s likely that individuals will continue to bear the brunt of these costs—which makes personal planning not just prudent but essential.
To build a successful retirement strategy, invert the question. Don’t ask, “What should I do?” Ask instead: “What could go wrong, and how do I prevent it?” Think about what could derail your retirement—catastrophic illness, unplanned expenses, family conflict, investment mistakes, fraud—and systematically build protections around those risks.
Because in retirement, peace of mind isn’t something you buy—it’s something you build. Year by year. Layer by layer. Risk by risk.
And the sooner you start, the more options you’ll have when it matters most.