Identifying Risks Is Where Planning Begins

Every CFP®, CFA®, CPA, JD, etc., knows that a credible planning process begins with a simple premise: identify the risks that can disrupt the plan, and build strategies to neutralize them.

We model market volatility because it can reduce wealth.
We model longevity because it can deplete income.
We model inflation because it erodes purchasing power.
We model taxes because timing and sequence matter.

These risks are well understood, widely accepted, and fully integrated into financial, tax, estate, and retirement planning frameworks. Yet one risk — the risk that a client will need extended healthcare or custodial support — remains the least measured, least modeled, and least discussed component of modern planning, despite being the most likely to occur and the most damaging when it does.

Most Americans over age 65 will need some form of Long-Term Care (LTC) in their lifetime — the only real question is to what extent, and for how long. And when that time comes, this aspect of Healthcare In Retirement (HIR) affects everything a plan was designed to protect:

• Cash flow
• Portfolio longevity
• Tax efficiency
• Liquidity strategy
• Sequence risk
• Family dynamics
• Legacy goals

In other words, LTC/HIR is not a niche issue; it is a core planning input. Yet the prevailing blind spot remains: “We’ll self-fund.”  Self-funding is often treated as an acceptable default, but in practice, it’s not a strategy — it’s the absence of one. Self-funding assumes that:

• Assets will be available at the moment care is needed
• Markets will be favorable
• Liquidity will be sufficient
• Taxes won’t distort withdrawal timing
• Family support will be coordinated and ready
• The event will be short, predictable, and inexpensive

None of those assumptions align with reality because a care event disrupts timing, spending, liquidity, taxes, and investments simultaneously. It forces decisions under emotional pressure, at the exact moment when stability matters most.  Every other risk in planning is modeled, but LTC/HIR, if even acknowledged, is ignored and remains a risk that can derail the planning.  It belongs in the plan as the purpose of planning is to confront the risks that matter, not just the ones that are easy to illustrate, when LTC/HIR risk:

• It is highly probable.
• It is financially significant.
• It is emotionally consequential.
• It is operationally complex.
• It is completely uncorrelated with markets.
• And it arrives at a time when flexibility is lowest.

This makes it different from every other risk consumers face, and it makes the traditional “we’ll deal with it later” approach increasingly indefensible.

The Reality: If the plan doesn’t address care, the plan is incomplete!

This has almost nothing to do with the product; it’s about recognizing that aging introduces a set of risks that can unwind even the strongest financial plan if left unaddressed. Regardless of the level of client care — Know Your Client, Reg BI, or fiduciary — there is a legal, ethical, and practical obligation to stop treating the most probable and most disruptive retirement risk as an afterthought.

LTC Planning is not optional - It is a foundational element of responsible planning.  Because planning begins with identifying risks that can disrupt the plan, and care risk is the one risk that touches every part of it.