The Real Costs of Long-Term Care

Listen to Best in Wealth Podcast Episode 274

How Much Does Long-Term Care Cost, and How Can You Plan for It?

You have likely heard the oft-cited statistic: 70% of people turning 65 will need long-term care. While this number is technically accurate, it wildly overstates the financial risk. The broad 70% figure counts any functional limitation, such as a daughter driving you to an appointment for a few months, as “care.”

A more meaningful statistic comes from Health and Human Services, which uses a stricter definition: needing help with at least two activities of daily living or supervision due to serious cognitive impairment, expected to last longer than 90 days. By this standard, 56% of Americans turning 65 will require long-term care. Nearly half will never face a significant care need, while about one in five will need care for more than five years, creating the potential for a significant financial burden and making long-term care planning an important part of retirement planning.

Outline of This Episode

• [00:00] Long-term care costs explained
• [05:15] Women at higher long-term care risk
• [09:06] Understanding Medicare and long-term care costs
• [12:33] Discussing caregiver options
• [15:05] Challenges of caregiving in retirement
• [17:54] Planning for long-term care costs
• [18:46] Your five action steps to plan for long-term care
• [20:34] Discussing future caregiving plans

Women face higher odds and longer durations of care, with 64% of women versus 49% of men developing a significant care need. Reasons include longer life expectancies and, for married couples, the pattern that the husband often receives care from his wife, while in widowhood, she must pay for professional or facility care.

The Real Costs: Assisted Living, Nursing Homes, and Home Care

The latest CareScout Cost of Care Survey puts hard numbers to what families faced in 2025: The cost of long-term care varies significantly depending on the type and duration of care needed:

• In-home caregiving: $35/hour. At the typical 44 hours per week, that’s $80,000/year, and not even round-the-clock.
• Assisted living: Median costs are $6,200/month, or $74,400/year. These assisted living costs can add up quickly over several years of care.
• Nursing home: $315/day for a semi-private room (about $115,000/year), with private rooms running closer to $130,000/year. These nursing home costs can put significant pressure on retirement savings.

The financial impact becomes clearer when you factor in duration. Assisted living at $74,000/year over 3.6 years, the average for women, can easily surpass $270,000 before inflation. For the unlucky one in five who need care for five+ years, a lifetime’s savings can be wiped away.

For pre-retirees and retirees, understanding these potential long-term care costs is an important part of protecting retirement assets and planning for financial security. Long-term care expenses can affect not only your own retirement, but also the financial future of your spouse and family.

Who Pays? The Great Medicare Myth

Does Medicare cover long-term care? It is a common question, and the answer may surprise you. Medicare does not provide broad coverage for long-term care. It covers certain short-term skilled care or rehabilitation after a hospital stay, subject to specific requirements and coverage limits. It does not cover ongoing custodial care, including help with bathing, dressing, eating, and other typical long-term care needs.

So who covers the bills?

• You (out-of-pocket): This is the default for middle- and upper-middle-income families, planned or not. Without proper retirement financial planning, significant long-term care costs can quickly consume assets intended to support retirement.
• Insurance: While long-term care insurance exists, it’s gotten pricier and harder to qualify for. Evaluation should happen in your 50s or early 60s, not your 70s.
• Family members: Often, a spouse or adult child becomes the caregiver. 63 million Americans act as caregivers, supplying care valued at over $1 trillion annually.
• Medicaid: Medicaid can serve as a safety net after assets have been substantially depleted. The spouse at home, known as the “community spouse,” may retain some assets and the house, but relying on Medicaid is far from an ideal retirement plan.

The Power of Early Action

Financial costs are only half the story. The first caregiver is usually a spouse, not a paid professional. Caregiving can rapidly erode the health, finances, and social connections of the caregiver, often leaving the surviving spouse depleted and isolated just as they face their own aging alone.

Long-term care risk is not a remote possibility; it is a central part of retirement planning. For those approaching retirement, long-term care planning can help address how care might affect retirement income, savings, and family wealth before a crisis occurs. Every tool for managing the risk works better if you start before a crisis hits.

Take the first step right now: look up care costs in your area, show them to your spouse, and start the conversation. Early planning is not just about saving money. It is about protecting the person you love most from added hardship when they can least afford it, while helping protect your retirement assets and the financial future of your family.

Resources Mentioned

• U.S. Department of Health and Human Services — ASPE: Long-Term Services and Supports for Older Americans (2022)
• HHS/ASPE — What Is the Lifetime Risk of Needing and Receiving LTSS?
• CareScout — 2025 Cost of Care Survey
• AARP & National Alliance for Caregiving — Caregiving in the U.S. 2025 Report
• AARP Public Policy Institute — Valuing the Invaluable 2026 Update
• Medicaid.gov — Spousal Impoverishment Eligibility Standards
• Medicare.gov — Skilled Nursing Facility Coverage Limits

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