What Is the Cost of Long-Term Care?

The daydreams of those who imagine life beyond the workforce may include travel, recreation, relaxation, and time to pursue lifelong passions. After thoughtful preparation and disciplined saving, those dreams may be financially within reach. The hope, of course, is to have the good health to enjoy them. But aging can bring circumstances that are difficult to anticipate, including chronic illness and the need for extended care. Despite the likelihood and potential expense, many people remain unprepared for this stage of life. Whether care is provided at home, in an assisted-living facility, or in a nursing home, the costs can place significant financial and emotional strain on individuals and their families. Planning for long-term care can help protect the life and financial security an individual has worked years to build.

Understanding Long-term Care

Long-term care encompasses a range of services and support designed to meet an individual’s health and personal care needs over an extended period. It can help people remain safe and independent when they have difficulty performing everyday activities such as bathing, dressing, or moving around without assistance. Depending on needs, care may include in-home help, transportation and housekeeping assistance, modifications that support aging in place, or more extensive care provided through assisted-living communities and nursing facilities.

Importance of Planning for Long-Term Care

The U.S. Department of Health and Human Services reports that 70% of Americans will need long-term care in their lifetime. For married couples, at least one person will likely require extended care. Still, an American Council of Life Insurers (ACLI) survey shows that six in 10 middle-income households head into retirement without a viable long-term care plan. Having a strategy for the final stages of life can help achieve the following goals:

• Financial preparedness: Planning for long-term care can help individuals determine how to fund future care while managing the effects on savings, taxes, and estate plans. A strategy may coordinate personal savings, insurance, income, and other resources while accounting for potential Medicaid rules. In Massachusetts, for example, MassHealth may recover certain care costs from a member’s probate estate after death. Anticipating these expenses provides more opportunity to make informed funding decisions and preserve assets for other priorities.
• Maintaining independence: Staying in control is important to most people as they reach later stages of life. With a plan in place, individuals can determine the care they want while they are able.
• Reducing family burden: Advanced planning can relieve family members of difficult decisions and ease the emotional burden on loved ones by outlining care preferences.

Steps to Planning for Long-Term Care

Preparing for future care involves several decisions, from evaluating potential needs and costs to determining how care will be funded and who will make decisions if circumstances change. Here are some important action points.

•  Evaluate needs: Consider health, family medical history, chronic conditions, lifestyle, and gender.
• Explore care options: Research adult day care, in-home care, assisted living, nursing homes, and the services each provides.
• Calculate costs: Identify the costs associated with each care option.
• Consider long-term care insurance: Compare policies and understand what each covers. Long-term care insurance can help pay for services not covered by regular health insurance or Medicare, and purchasing a policy at a younger age can be more cost-effective.
• Create a financial plan: Work with a financial advisor to develop a plan that accounts for long-term care costs, assets, income, and other resources.
• Make legal preparations: Establish a durable power of attorney, healthcare proxy, living will, and other appropriate legal documents so designated representatives can make financial and healthcare decisions if necessary.
•  Discuss with family: Communicate care preferences to family members.

Financing for Long-Term Care

Extended care can consume even substantial retirement savings. According to the 2025 CareScout Cost of Care Survey, the national median annual cost reached $129,575 for a private room in a nursing home and $80,080 for a non-medical in-home caregiver providing 44 hours of care per week. In some states, like Massachusetts, these costs are considerably higher. A private room in a nursing home costs nearly $190,000 per year, and a non-medical caregiver costs around $91,000.

A person’s economic situation and care needs dictate how long-term care is funded. Personal savings, long-term care insurance, Medicaid for those who qualify, and certain Veterans benefits may help pay for care. Medicare generally does not cover extended long-term care, although it may cover certain short-term skilled nursing and home health services under specific conditions.

Traditional long-term care insurance can help offset the cost of in-home care, assisted living, or nursing care, depending on the policy. Annual premiums can range from roughly $2,000 to $7,000 or more, with costs varying considerably based on age, health, sex, coverage levels, and inflation protection. Lower premiums generally apply to younger, healthier applicants or policies with more limited benefits, while more extensive coverage and inflation protection increase the cost. Because policies may not cover the full cost of care, individuals should understand their benefits, waiting periods, coverage limits, and potential out-of-pocket expenses.

Don’t wait until long-term care is necessary to determine how to pay for it. Planning affords individuals more control over where they receive care, how they fund it, and what remains for other priorities. At SHP Financial, we help clients assess insurance and self-funding options, model the effect of care costs on income and assets, and coordinate financial decisions with estate and healthcare plans. Contact SHP Financial today to schedule a complimentary portfolio review so you can spend less time wondering and worrying and more living and dreaming.