Long-Term Care Costs — How They Could Affect Your Retirement

The Numbers

How much does long-term care actually cost?

The median annual cost of a private nursing home room in the U.S. exceeds $108,000. Assisted living averages about $64,000 per year. Home health aide services run $60,000–$75,000 annually. Approximately 70% of people turning 65 today will need some form of long-term care during their lifetime.

These are among the largest financial risks facing retirees, yet most people have not planned for them. A three-year nursing home stay could consume $325,000 or more — enough to deplete a substantial retirement nest egg and potentially impoverish a surviving spouse.

Cost figures are national medians based on published survey data as of 2025–2026 and vary significantly by region, facility, and level of care needed.

Coverage Options

What are the ways to pay for long-term care?

The four main options are traditional long-term care insurance, hybrid life/LTC policies, self-insuring from savings, and Medicaid (for those who qualify financially). Each approach has trade-offs in terms of cost, flexibility, and asset protection.

Traditional LTC insurance

Pays a daily or monthly benefit toward care costs after a waiting period. Premiums can increase over time. Best for people who want dedicated coverage and can afford the ongoing premium commitment.

Hybrid life/LTC policies

Combines life insurance with LTC benefits. If care is needed, the policy pays for it. If not, beneficiaries receive a death benefit. Premiums are typically fixed. Best for people who want both protection and a guaranteed return of value.

Self-insuring

Using your own savings and investments to cover care costs. This requires substantial assets and carries the risk of depleting your estate. It may make sense for very high-net-worth individuals or those with strong family support systems.

Medicaid

The government program covers long-term care for people who meet strict income and asset limits. Most people must spend down their assets significantly before qualifying. Planning ahead with appropriate strategies can help protect assets while still accessing Medicaid if needed.

Planning Ahead

When should you start planning for long-term care?

Most professionals recommend evaluating long-term care options in your 50s to early 60s. Premiums are lower when you are younger and healthier, and you have more product options available. Waiting until health issues arise can limit your choices or make coverage unaffordable.

Long-term care planning is not just about insurance. It includes understanding your options, discussing wishes with family members, reviewing your legal documents (power of attorney, healthcare directive), and deciding how care costs fit into your overall retirement income plan.

Ben can help you evaluate long-term care insurance options and hybrid life/LTC policies from multiple carriers. He can show you how different coverage levels and waiting periods affect premium costs, so you can find a balance that fits your budget and your goals.

Common questions

How much does long-term care cost?+

Costs vary significantly by region and type of care. Nationally, the median cost for a private nursing home room exceeds $108,000 per year. Home health aide services average $60,000–$75,000 annually. Costs in the Spokane area may differ from national averages.

Does Medicare pay for long-term care?+

Medicare covers limited skilled nursing facility stays (up to 100 days) following a qualifying hospital stay, and limited home health services. Medicare does not pay for custodial care — the type of assistance most people need for daily activities like bathing, dressing, and eating.

What does long-term care insurance cover?+

Traditional LTC insurance pays a daily or monthly benefit toward qualified long-term care services including nursing home care, assisted living, home health aides, and adult day care. Benefits typically begin after a waiting period (commonly 90 days).

What is a hybrid life/LTC policy?+

A hybrid policy combines life insurance with long-term care benefits. If you need care, the policy pays for it. If you never need care, your beneficiaries receive a death benefit. Some people prefer hybrids because the premium is not lost if care is never needed.

What happens if I cannot afford LTC insurance?+

Self-insuring (paying out of pocket) is one option if you have sufficient assets. Medicaid covers long-term care for those who meet income and asset eligibility requirements, but typically requires spending down most assets first. Planning ahead gives you more options.

When is the best age to buy long-term care insurance?+

Premiums are lower when you are younger and healthier. Most financial professionals suggest evaluating LTC coverage in your 50s to early 60s. Waiting too long may result in higher premiums or inability to qualify due to health conditions.

Long-term care costs: the retirement risk most people ignore.