HECM

50% of Retirees Will Need Long-Term Care at 85: How Will Your Retirement Plan Today Address That?

June 10, 2026 By Jerry Golden in Annuity, Interesting Articles Tags: H2I, HECM, liquid savings, Long-term care costs, QLAC, retirement income

This is about more than longevity protection. It’s about whether you can afford to age in place, can help kids and grandkids now and after you pass and avoid making compromises on your healthcare.

For most of my life, I’ve worked as an innovator in the financial services space, with a particular focus on life insurance and annuity products.

For 40 years, that was my job and specialty. One of my “first of a kind” product inventions — the Accumulator — offered downside protection on the income that a variable annuity could provide and eventually created a $1 trillion industry.

50% of retirees will need long-term care

In my current role as an investment adviser focused on retirement planning, my innovations address the current needs of retirees regarding greater longevity, concern about Social Security, high inflation, taxes and increasing medical and long-term care costs. As this survey of retirees by Schroders details, those are the top concerns of many people in retirement.

The concerns about costs of long-term care are about to increase even further, with a new federal Medicaid rule that, beginning in 2028, will cap allowable home equity at $1 million. This will most directly affect middle-class homeowners in high-cost markets.

Under current rules, states set the amount of equity that a homeowner could maintain and still qualify for Medicaid LTC coverage. It ranged from about $750,000 to $1.13 million — and it was adjusted every year for inflation. In 2028, the allowable equity will be $1 million for everyone (except farm families), and it will not be indexed for inflation.

Of course, there are other related costs that Medicaid will not cover, like assisted living or for services like a home aide, unless the retiree satisfies a means test.

Change in retirement planning is necessary

As it happens, I’ve been working on a new design for retirement planning that addresses long-term care costs. It does require, among other things, a breakdown of the silos between investments, annuities and housing wealth.

This design change doesn’t focus on wealthy or lower-income retirees, but rather, the broad group of so-called mass affluent. The most popular planning approach for this group of retirees is to invest in different investment portfolios and withdraw 4% to 5% per year, increasing by inflation. Intuitively, most retirees know that they can do a lot better not only in the level of income, but also in the reduction of risk and taxes, and in greater liquid savings.

On the other hand, most don’t fully appreciate the potential costs of long-term care. Not surprisingly, those who live longer are more likely to need long-term support and services like nursing home care. One interesting statistic is that 50% of retirees age 85 and over will need long-term-care services, which are in the $80,000-to-$150,000-per-year range, with a historical increase rate of 3% to 5% per year.

Our analysis suggests these costs may represent nearly 25% of the average $2 million in net worth split between a rollover IRA and value of a home. Without planning for those costs in advance, the sale of the home, with the related closing costs and taxes, may be required.

Here are the retirement planning design changes we developed.

Consider all major asset classes, including housing wealth and lifetime annuities

In figuring out a solution to these retirement challenges, whether or not Medicaid is an option, it made sense to look at all of a client’s net worth. That struck a chord when housing wealth was reported as 50% of our sample retired client’s wealth.

Importantly, the innovations needed to be doable with no regulatory change or product refinement — and simply in the retirement planning space. It had to be accomplished through our planning algorithm and executed by an adviser through partnering with different product providers.

The first step was how to include housing wealth in the planning. The second was the integration of the most logical but underutilized retirement product — lifetime annuities.

The key for me was to consider them together rather than separately. Why together?

That togetherness answers the following key objections that often are raised about each product individually (also, see my article Transform Your Retirement Plan With This Powerful Combo):

Housing wealth. If using a reverse mortgage such as a home equity conversion mortgage (HECM) to unlock this wealth, the objections are the costs — and the risks if you borrow too much. (See my article How Your Home Can Fill Gaps in Your Retirement Plan.)
Lifetime annuities. A qualifying longevity annuity contract (QLAC) can help define a better retirement by deferring taxable IRA distributions and delivering guaranteed lifetime income at an age you select. (See A QLAC Does So Much More Than Simply Defer Taxes.) Despite a lifetime payout for a 67-year-old man of, say, $50,000 per year on a $100,000 premium, retirees often object to the lack of liquidity.

In our development phase, we said, “HECM, meet QLAC.” Individually, both HECM and QLAC can be helpful in their own ways. Together, we call it HomeEquity2Income, and the combination can help you stay in your home as you build liquidity for possible long-term care costs, as well as boost income. It also means you don’t have to spend down the savings in your rollover IRA to qualify for Medicaid.

Here’s how we put them together:

1. Set up a line of credit through HECM and purchase QLAC from rollover IRA savings:

Housing Wealth – HECM Rollover IRA – QLAC

2. Analyze standard configurations under HECM and QLAC and why they may not work for your retirement plan. The charts below demonstrate results from both a HECM and a QLAC on a stand-alone basis, as often presented to retirees. In our view, while both are reasonable designs they are not used most effectively for retirement purposes.

HECM – Drawdowns and Liquid Savings
QLAC – Lifetime Income (Defer to Age 85)

Total Income to 95: $550,000 | Liquid Savings at 95: $450,000
Total Income to 95: $800,000

3. Use a new algorithm for a combination of a HECM and a QLAC (HomeEquity2Income, or H2I) to meet twin retiree objectives of increasing income and increasing liquid savings. At the same time, establish a building block for your retirement plan.

HomeEquity2Income:
Combination of HECM an QLAC
Increasing Income and Liquid Savings

Testing H2I for legacy and historical rates

While income and liquid savings are two important elements of H2I, retirees may also consider the effect of H2I on the legacy they’re providing to their spouse and other family members.

Also, the broad message for planning is not to try to predict the exact amount of savings or legacy for each homeowner, but to demonstrate the possible impact of the market performance on your own plan.

The illustrations above were based on industry standard fixed rates but, as covered in my article Treat Home Equity Like Other Investments in Your Retirement Plan: Look at Its Track Record, we believe it important to be able to Illustrate benefits based on historical performance. By using historical rates, we are looking at the interplay of various product elements with real-world performance.

HomeEquity2Income
Combination of HECM and QLAC (Historical Rates)
Increasing Income, Liquid Savings and Legacy

Total Income to 95: $850,000 | Liquid Savings at 95: $1.45 million
Legacy at 95: $2.95 million

Looking at the expanded example of this combination, here’s what we learned about each component:

HECM’s liquid savings grow dramatically when you stop drawing down from a line of credit and use a part of QLAC income to pay down the loan balance
QLAC may be purchased in a laddered format to create increasing income before age 85. In limited situations, QLAC income may be accelerated before its original income start age
And in combination, HECM and QLAC offer significant tax advantages, particularly in early retirement years

Use H2I as building block in a retirement plan with other savings

With H2I in place, the question becomes how we might further combine it with other retirement savings. Let’s look at adding to H2I our sample retiree’s rollover IRA savings ($800,000 after QLAC premium), personal savings ($1 million) and Social Security payments ($36,000 starting at 67). While portfolio allocation is often a very personal decision, here’s what our starting plan reflects:

Allocation of $800,000 in IRA between stocks (growth) and bonds in a balanced portfolio.
Allocation of $1 million in personal savings among stocks (high dividends), bonds, and SPIA (single-premium immediate annuity).

What is the starting income this plan will support? Using H2I as a building block and the Go2Income planning algorithm, the starting income is $133,000. The plan assumes that income will grow at 2% per year.

Go2Income
H2I, Rollover IRA, Personal Savings (Historical Rates)
Increasing Income, Liquid Savings, Legacy

Total Income to 95: $5.15 million | Liquid Savings at 95: $3.35 million
Legacy at 95: $4.85 million

With the $36,000 of Social Security benefits, the total starting income is $169,000. The retiree can, of course, refine the plan to increase income and lower the substantial amounts of legacy and liquid savings.

Long-term care scenario testing

The next step in the process was to test various H2I scenarios as they related to covering long-term care. That’s particularly timely with greater longevity and increased responsibility of retirees, leading to coverage of more long-term care costs.

The economic return for H2I in the 3.5% to 4.5% range is attractive, recognizing the major asset is the housing wealth, assuming a growth rate of around 4%. In one sense, the higher crediting rate on a QLAC is offsetting the higher HECM interest rate.

In the scenarios above, we are able to generate additional income and cover $100,000 in LTC costs over five years from age 85 to 89. We would need to do some stress-testing for larger or different patterns of LTC expense. Of course, we should consider the resources from other retirement savings.

The income tax effects are quite positive with all HECM drawdowns tax-free, QLAC income deferred until received and LTC costs being tax deductible. (See my article The 9% Solution: An Expert Guide to Retirement Tax Breaks That Could Cut Your Tax Rate Nearly in Half.)

H2I for this sample investor can cover a reasonable amount of LTC costs while delivering higher income. The final planning steps include further testing to confirm results. Including a measure of income taxes, market risk and IRR (internal rate of return) before and after tax, we look at three qualities of the plan in our evaluation:

Inflation protection
After-tax income
Stock market risk

For retirees, it means they no longer need to keep an eye on new caps for home equity or spend down all their other assets to qualify for Medicaid’s LTC benefits.

Even for those who never considered Medicaid as an option, H2I provides an easier way to create wealth from retirement savings while aging in place.

Unlike product innovation in the past, these design changes don’t require regulatory change, product pricing or design changes, or special servicing. Just stack these building blocks and assemble them as the plan instructs. Visit Go2Income, where you can start building your own plan.

Does Your Retirement Plan Ignore Half of Your Net Worth? Here’s How You Can Tap Your Housing Wealth for a More Robust Retirement

June 1, 2026 By Jerry Golden in Annuity Tags: HECM, Housing wealth, Jerry Golden, QLAC, Robust retirement

Including your housing wealth in your retirement plan, such as by using a HECM, can lead to higher lifetime income and a significantly larger legacy than a plan based on selling your home to access the cash.

Editor’s note: This is the third article in a five-part series about all-asset retirement planning that is covering such topics as using annuities and housing wealth, making the most of tax benefits and managing investment portfolio risk. Articles one and two are It’s Time to Redefine Retirement for Retirees With $500,000 to $5 Million: Here’s How and Unlock Housing Wealth and Tax Benefits by Adding Lifetime Annuities to Your Retirement Plan.

For most Baby Boomers, their home represents 50% of their net worth, yet retirement planning software and advisers virtually ignore this asset in designing retirement income plans.

A Federal Reserve study shows that the share of net worth in primary residences among households headed by people ages 60 to 69 rose from roughly 40% in 1989 to just over 50% by 2022.

Unlock Housing Wealth and Tax Benefits by Adding Lifetime Annuities to Your Retirement Plan

June 1, 2026 By Jerry Golden in Annuity Tags: HECM, Housing wealth, Jerry Golden, QLAC

Combining a QLAC with a HECM can help mass affluent retirees secure guaranteed lifetime income, tax advantages and liquid savings to cover late-in-life expenses beyond what their 401(k) or IRA savings alone could provide.

Editor’s note: This is the second article in a five-part series about all-asset retirement planning that is covering such topics as using annuities and housing wealth, making the most of tax benefits and establishing an investment strategy. Article one is It’s Time to Redefine Retirement for Retirees With $500,000 to $5 Million: Here’s How.

With the benefit of Social Security, almost all retirees are guaranteed some level of lifetime income. So, the question isn’t “Will I run out of money?” Instead, it’s, “How much income is enough to cover my living expenses, after covering my late-in-life health and long-term care expenses?”

It’s Time to Redefine Retirement for Retirees With $500,000 to $5 Million: Here’s How

April 22, 2026 By Jerry Golden in Annuity Tags: HECM, Jerry Golden, lifetime income, QLAC

Retirees with $500,000 to $5 million in assets need a different approach to keep their house and cover ever-increasing health care expenses, including long-term care, without taking too much risk and paying too much in taxes.

Editor’s note: This is the first article in a five-part series about all-asset retirement planning that will cover such topics as using annuities and housing wealth, making the most of tax benefits and establishing an investment strategy.

Wouldn’t it be wonderful if we could hit retirement and let all the money we saved over the years, plus the Social Security benefits we earned, do the job to keep us comfortable and without worry or stress — for the rest of our retirement?

Yes, it would. But that’s not how retirement works. Today, we don’t know whether our Social Security benefits will survive without cutbacks.

We’re living longer (yay!), but that means we might incur thousands of dollars in expenses for health care in later years.

Our kids are staying at home longer and need more help when they leave.

And if the stock market tanks (or simply underperforms relative to the past few years), a lot of that money we built up disappears. Or forces a drastic change in plans, such as selling the house you planned to live in for the rest of your retirement.

In this article — the first of a series of five — I pull back the curtain on how we’ve addressed retirement concerns for the large segment of retirees with $500,000 to $5 million in assets.

We call them “mass affluent,” and though they are well-off, they can’t live on investment income alone, as the high-net-worth folks do.

They need a different approach to maintain the house and take care of long-term care costs and ever-increasing health care expenses without taking too much risk and paying too much in taxes.

That’s our market, and those are the retirement goals we set in our planning.

Looking at all assets

We started with the premise that the more asset class options a planning system has, the more likely that it will produce better results.

Until recently, most people — investors and advisers alike — would say that a well-diversified and prudently managed portfolio could solve every retirement issue.

As we found through testing (and with confirmation from AI), no single asset class, no matter how diversified, can efficiently address all risks at once. Retirement is a risk-management problem that involves longevity, liquidity, taxes and timing.

The challenge was to find the set of asset class options that can be personalized, made understandable and modeled based on reasonable assumptions.

You can see how this approach developed by reading a portion of the more than 100 articles we’ve published on Kiplinger.com. Or you can go over the history below.

Longevity protection

Besides being an investment adviser, I’m an actuary by training, run an insurance agency and have two patents around lifetime annuities. So, I believe in the original form of annuities that guarantees income for life.

In fact, one of my first assignments as a junior actuary was to price an immediate annuity, which mainly involved picking a mortality table for the average annuity buyer and working with the investment department to match the annuity’s assets and liabilities at sustainable interest rates.

It was an important assignment since my employer — an insurance company — was guaranteeing the payments for life.

Not a lot happened in the lifetime annuity field for a while — with most activity in deferred annuities, which are like tax-deferred investments.

But about 10 years ago, the government authorized a qualified longevity annuity contract (QLAC) that offers a way for retirees to guarantee lifetime income.

A QLAC lets a homeowner use a portion of their rollover IRA savings (up to a little more than $200,000) to purchase guaranteed income starting at a future date no later than age 85.

Not only is the retiree deferring taxes on required minimum distributions (RMDs), but there’s also a huge longevity benefit. In today’s market, a 67-year-old man who allocates $100,000 to a QLAC will receive a guarantee of $50,000 a year for life starting at age 85. (One other QLAC feature is the ability, within limits, to accelerate the income to an earlier age.)

What we did with this valuable longevity protection and tax benefits was to include a QLAC as a key part of the all-asset retirement plan, using our proprietary QLAC allocation system.

Liquidity as needed

Liquidity — access to cash or assets that can be quickly converted to cash — often poses a problem for retirees and is a planning issue we’ve grappled with, too.

Is the answer to keep thousands in a bank account until needed? Cash out an IRA to pay for long-term care expenses, which today average over $400,000?

Those approaches are expensive, and they fail to provide flexibility or total peace of mind.

That’s why we began an analysis of the home equity conversion mortgage (HECM). This is a reverse mortgage insured by Housing and Urban Development (HUD) with protections that allow the primary mortgage holder and spouse to remain in the home for their entire lives. (The homeowner does have to maintain the payment of homeowners insurance and property taxes.)

A HECM provides for drawdowns that the homeowner can use as necessary, as well as a line of credit that can be a resource for large costs like long-term care. And the homeowner and family are not on the hook in case the borrowings exceed the market value of the house.

We knew that a HECM could be a partial answer to liquidity in a retirement if integrated correctly.

HECM as part of a retirement plan

I’ve written about this before in the article What the HECM? Combine It With a QLAC and See What Happens. To repeat, the key is to partner up a HECM with a QLAC so that each element does its best work.

In this design, which we call HomeEquity2Income, a HECM provides both modest drawdowns in early retirement years and substantial liquid savings late in retirement, and a QLAC provides long-term longevity protection.

We’ll go into more detail in one of the future articles in this series.

Rollover IRA and personal savings

A rollover IRA and personal savings may represent 50% of a retiree’s average net worth; however, they are often treated as the only parts of a retirement financial plan: Live off the investment returns until the end of life.

In our planning, while we don’t address the tactics of individual security selection, our plan does look at these key aspects of portfolio design:

Maximize after-tax results
Recommend balance of growth vs income portfolios
Achieve retirement plan goals without complex or risky strategies

We will talk more about how these strategies have performed historically and how to figure out the most effective way the portfolios work with other asset classes in the upcoming articles of the series.

Curious about how your plan might look? You can take the first steps to putting it together. Input your numbers here and find out how your retirement could benefit by combining all your assets. A Go2Income adviser can answer questions.

How All-Assets Planning Offers a Better Retirement

December 20, 2025 By Jerry Golden in Annuity Tags: all-asset planning, HECM, income, Income annuities, Legacy, Liquidity, QLAC, retirement savings

Special Advance Announcement

Go2Income announces a breakthrough IRA4Income design that integrates housing wealth and lifetime annuities into your retirement plan. Our average plan delivers 7% in starting income, increasing to age 85, plus liquid savings to cover large late-in-retirement expenses. Personalized plans available on January 5, 2026.

The net worth of retirees over the past three decades has tilted steadily toward housing wealth.

A study by the Federal Reserve shows that the share of net worth in primary residences among households headed by people ages 60 to 69 rose from roughly 40% in 1989 to just over 50% by 2022. For those aged 70 to 79, the share climbed from about 38% to 50% over the same period.

Ideally, the retirement industry would look for solutions that allow retirees to take full advantage of their housing wealth with plans that incorporate all their assets. We know that the wheels of change grind slowly. The big financial advising companies have to explore new ideas carefully.

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