Skip to main content Skip to footer
Back to all articles

Why Retirees Should Be Planning for Long-Term Care Now

There’s several reasons why you may need to start planning for long-term care and how it could affect your retirement. Find out more here.

Why Retirees Should Be Planning for Long-Term Care Now

Long-term care may be required for a number of reasons. Maybe it is due to a chronic condition that you’ve had for a long time or a more recent illness incurred after retirement. It’s possible that traditional caregivers like friends, family, and loved ones live too far away to provide the type of care you will require.

It could also be that advanced age will make it difficult to live the independent lifestyle you are accustomed to. Whatever the reason, you are not alone in this endeavor.

On any given day in 2018, there were 251,000 participants enrolled in adult day services centers, 1,322,000 residents in nursing homes, and 918,700 residents living in residential care communities, according to the CDC. Additionally, the number of Americans needing long-term care is expected to balloon from approximately 12 million today to 27 million in 2050.

There’s several reasons why you may need to start planning for long-term care and how it could affect your retirement.


People living longer than ever

People are living much longer lives than in 1930, when life expectancy at birth was only 58 for men and 62 for women.

This increase in lifetime of Americans is due to a number of reasons, including:

  • Healthier diets
  • Lower infant mortality rates
  • Increased attention to exercise
  • Better access to healthcare providers and advanced technologies

In fact, by 2050 the number of Americans 65 years and older is projected to increase to almost 89 million―nearly 20 percent of the total U.S. population.

The sheer number of people living longer lives translates into increased competition for long-term care resources like quality assisted living residences, hospice, and access to medical specialty providers. That means you may have to budget even more for long-term care services that you’ll need sometime down the road.

Expensive costs of nursing facilities, long-term care

Things are getting more expensive across the board. For example, in 2022, the cost of a private room in an assisted living facility averaged almost $9,034, according to a Genworth Cost of Care Survey. Getting care in the privacy of your own home is slightly cheaper, but not by much: The survey found the median rate for a home health aide was almost $5,070.

Considering the average monthly mortgage payment was about $1,374 during the same period, assisted living costs are huge and can quickly dry up your finances if you haven’t secured enough money for long-term care.  

Don’t deplete your retirement savings

Long-term care in a nursing home costs over $97,000 per year. You could dip into cash savings to cover the costs, but if you are like the average American who has less than $164,000 saved for overall retirement costs, cash won’t be an option.

You could also turn to Medicare to help for skilled nursing facilities, home health care, or hospice, but only under certain conditions. You’ll still likely have to pay Medicare Part B coinsurance, deductibles, and any other uncovered services out of pocket.

You could qualify for Medicaid, but benefits are limited to certain income and asset levels, so you could lose a lot of choice in the type of care you can receive.

Another option is to get an annuity with a long-term care rider. This could go a long way toward covering long-term care expenses, but you’ll have to be in a position to pony up the initial investment funds.

Long-term care insurance

A long-term care policy may be the best option for retirees that need care for chronic illnesses or disabilities that may persist over long periods of time.

Many policies cover services like nursing homes, adult day care, and certain modifications to your home that are safety related. The caveat associated with many long-term care insurance policies is that they can come with facility restrictions as to which services they cover as well as qualification requirements placed on them medical providers.

When shopping for a long-term care insurance policy, consider the following factors:

  • Age and health: The younger and healthier you are, the cheaper the policy costs.
  • Premium costs: Factor into your budget that premiums will generally increase over time.
  • Savings and investments: Consider hiring a financial advisor to help guide your decisions.
  • Taxes: Get a policy that allows you to deduct the cost of premiums from federal taxes.
  • Policy type: Weigh the options of an individual, employer-sponsored, or joint policy.
  • Covered services: Make sure that your policy covers the services you are most likely to use or receive.
  • Coverage amounts: Make sure the benefit limits meet your particular needs.
  • Waiting periods: Make sure any benefit waiting periods are acceptable to your situation.
  • Inflation: Make sure to factor inflation rates―currently 2.5 percent―into your budget.
  • Premium increases: Anticipate that most premiums will increase over the life of the policy.

Long-term care planning is something a lot of people either ignore or don’t think they will need. The unfortunate reality is that the majority of people will need some sort of care assistance that can be costly and planning for it now is imperative.

Equal Opportunity Housing