Long-Term Care Planning Decisions to Make Now Before Retirement

You've probably mapped out retirement in your head a hundred times. Maybe it looks like mornings without alarms. A trip to Italy you keep putting off. More time with grandkids, a boat, a garden, a golf handicap that finally improves.

That vision is worth protecting.

But here's the part most retirement plans quietly skip over: what happens when your body — or your mind — needs help that you can't provide for yourself?

Not if. When.

The federal government estimates that 56 percent of Americans turning 65 will need long-term care at some point — meaning they'll need hands-on help with basic daily activities or supervision due to cognitive impairment. That's not a fringe risk. That's most of us. And yet, most people spend more time planning a two-week vacation than they spend planning for a cost that could outlast their savings.

Retirement planning covers the things you look forward to — income, travel, housing, legacy. Long-term care is the thing most people don't look forward to thinking about, which is exactly why it blindsides them. The cost of care is rising fast. A single year in a private nursing home room now exceeds what many Americans earn in a year. An extended care need doesn't just drain a retirement account — it can wipe one out entirely.

And money isn't the only thing at stake.

When there's no plan, the crisis lands on the people closest to you. A spouse becomes a caregiver. An adult child puts a career on hold. Family decisions that should never have been rushed get made in hospital hallways. That's not the retirement anyone imagined — for you, or for them.

👉 What is long-term care?

The good news? This risk is plannable. You have options today that you may not have tomorrow, and the earlier you start, the more of those options you get to keep.

• Current and Future Cost of Long-Term Care Services Near You

As you age, you face a higher risk of injuries and disabilities that may require care. According to the Centers for Disease Control and Prevention (CDC), two in five adults aged 65 and over are affected by disabilities.

Of course, as you get older, your risk of needing help with everyday living activities or suffering from dementia increases. The U.S. Department of Health and Human Services (HHS) estimates that over half (56%) of Americans turning 65 today will develop a need for long-term services.

Long-term care is a risk you really don't want to ignore, and the impact of future long-term care on your family and finances will alter your retirement.

Doesn't Health Insurance or Medicare Cover Long-Term Care?

You might think planning for long-term care is unnecessary since the government or health insurance will pay for it. The problem is this isn't true.

Health insurance, including Medicare, only pays for short-term skilled care. These plans will not pay for long-term care. Medicaid will only pay for long-term care for someone with limited financial resources.

Long-Term Care Insurance is often misunderstood as being unnecessary, but it plays a critical role in a comprehensive retirement plan by covering costs that health insurance and Medicare do not. Health insurance and Medicare only pay for short-term skilled care, such as rehabilitation after a hospital stay, exposing you to the high and rising costs of long-term care services like custodial care at home, memory care, and assisted living facilities​, in addition to skilled nursing at a nursing home.

If you ignore long-term care planning as part of your retirement plan, you will be responsible for paying for long-term care until you have little money left. Otherwise, your family will become caregivers, you will pay for care from income, or you will become dependent on Medicaid.

Remember that being a caregiver is not easy for professionals, much less for untrained and unprepared family members. Do you want your daughter for example, to be responsible for bathing you, personal hygiene, and other living activities?  

The answer is no; you want your daughter and other loved ones to maintain their careers and personal responsibilities, allowing them time to be family instead of caregivers.

While Medicare won’t cover custodial long-term care, coordinating your LTC plan with your broader coverage can reduce gaps and confusion. An independent agent offering high-quality Medicare, Health, and Life insurance can compare carriers, explain enrollment timelines, and align benefits with your long-term care strategy so your retirement plan stays on track.

Things to Consider

The ideal time to start is in your 40s or 50s, when coverage is most affordable and health-related hurdles are fewest. But if you're already in your 60s and in reasonably good health, meaningful planning options are still within reach. What matters most is that you start — before a health change takes those options off the table. You don't start planning for long-term care when you or a loved one needs extended care.

How Much Money Do You Have?

How will you pay for future long-term care? Start by considering your current income and savings, including money in qualified retirement accounts. Generally, if you have less than $50,000 in assets, Long-Term Care Insurance may not be appropriate, although it could be if you have a guaranteed defined pension.  

Don't even think of self-funding unless you have more than $2,000,000 in assets outside of real estate. Even if you have that or more, Long-Term Care Insurance would be more efficient and provide tax advantages if you have an LTC policy.

If you have modest savings, a Partnership Long-Term Care Insurance policy would be your best option. With a partnership-certified LTC Insurance policy, you get additional dollar-for-dollar asset protection.

Few financial professionals are aware of the Long-Term Care Insurance Partnership Program, though most states have active programs in place. A qualified LTC Insurance specialist can guide you through the benefits of the Partnership Program, ensuring that you will never lose all your money, even in a catastrophic long-term care situation.

Where Will You Live in Retirement?

Long-term care costs vary dramatically depending on where you live and even within a state. You must understand the current and projected cost of care in the decades ahead. Once you know this information, you can design a Long-Term Care Insurance to address these costs.

Be sure to use the LTC News Cost of Care Calculator to find the costs in your state and metro area. For example, home care costs in Albany, Georgia, are less expensive than home care costs in Sacramento, California. The current costs in Albany, Georgia, for in-home care, based on a 44-hour week, average $4,296 per month. However, in Sacramento, California, the same amount of home care averages $6,794 a month. 

 According to LTC News, nursing homes are the most expensive (although the least used) type of long-term care. Other care options are usually more affordable. Here are the national averages according to the LTC News survey of long-term care costs:

• Home health aides currently average $5,673 per month. LTC News projects the cost to increase to $9,667 monthly by 2046.
• Adult day care currently costs an average of $1,719 per month. LTC NEWS projects the cost to increase to $3,029 by 2046.
• Assisted living base costs average $5,005 per month. Surcharges, which averages anywhere from $500 to $2000, are added to the base cost, depending on your needs. LTC News projects the base cost to increase to $8,529 monthly (plus surhcarges) by 2046.
• Skilled nursing homes currently average $10,824 per month for a private room. LTC News projects the cost to increase to $18,768 monthly in 2046.

Remember, the cost of care will vary depending on where you live. But your LTC policy does not have to cover ALL the future care costs. Many leading Long-Term Care Insurance specialists recommend using some of your future social security income or pension income, along with the LTC Insurance benefit, to pay for care without changing your lifestyle or burdening those you love.

This type of strategy in your policy design can save you a lot of money in LTC premiums. However, you get to decide for yourself the amount of LTC Insurance benefits you wish to have in your policy.

How Much Money Can You Budget for Premiums?

Long-Term Care Insurance comes at a cost, just like the future long-term care services you may need. Budgeting an amount you are comfortable with for your LTC policy is essential.

Good news: LTC Insurance is custom designed and is more affordable at younger ages. Even a small benefit can make a huge difference for your loved ones. Premiums are calculated in several ways:

• Age
• Gender
• Health
• Family history
• Type of policy (traditional, hybrid, short-term cash indemnity)
• Initial monthly or daily benefit (to pay for care)
• Initial benefit account (to pay for care)
• Inflation benefit
• Premium payment mode (annual, monthly, etc.)

Premiums and underwriting rules vary dramatically depending on the insurance company.

• How Much Does Long-Term Care Insurance Cost at Your Age?

What Type of LTC Policy Do You Want?

Generally, you will want to limit your research to a policy that meets federal guidelines under Section 7702(b) of federal code. When you have a policy that meets federal guidelines, you will have guaranteed consumer protections, regulated benefit triggers, and tax benefits.

• What Are Long-Term Care Insurance Regulations? How Do They Protect Policyholders?

You have two choices: a traditional (often partnership-certified) LTC policy. A traditional LTC policy is the type of policy most consumers purchase. However, hybrid policies have become popular in some situations. A hybrid policy combines a life insurance or annuity policy with a qualified rider for long-term care.

Short-term cash indemnity policies are also available with less conservative underwriting rules - Don't Be Fooled by the Name - New Policy Type Can Be Valuable Answer for Long-Term Care Expenses.

Be sure to discuss these options with an experienced Long-Term Care Insurance specialist representing all the top-rated insurance companies offering long-term care solutions. Most financial advisors and general insurance agents often only have one or two companies to select from.

Many financial advisors only offer hybrid policies. A specialist will have complete knowledge of all the available options, tax benefits, and underwriting rules.

What Insurance Company to Select

Does it matter what insurance company you select for your Long-Term Care Insurance? Insurance companies are regulated, and LTC Insurance is highly regulated by both the states and the federal government. However, you want a company with an A.M. Best, Standard & Poor's of at least an A.

• Top Insurers for Long-Term Care Insurance

Your Retirement Plan Needs a Long-Term Care Plan - Now

Your retirement savings took decades to build. Long-term care costs can unravel them in just a few years. The reality is sobering. You are likely to need help with daily living activities or require supervision due to dementia at some point in yoru life. What you don't know is when this will happen and for how long.

And extended care isn't cheap. Whether you need help at home, in an assisted living facility or in a nursing home, the costs can drain retirement income and savings faster than most people expect, leaving fewer resources for the retirement you envisioned — or the legacy you hoped to leave.

The stakes aren't just financial. Without a plan, the burden often falls on the people you love most. A spouse will feel obligated to be a caregiver despite their health and they may feel trapped inside to be that caregiver. An adult child may sacrifice their own career or savings to step in as a caregiver. Assets you spent a lifetime accumulating may be depleted well before care ends.

Here's the good news: planning now — while you're healthy — gives you far more options than planning in a crisis. Long-Term Care Insurance becomes harder to qualify for as your health changes, and premiums reflect the risk you carry at the time of application. Waiting isn't neutral. It's a decision with consequences.

👉 Learn more with the LTC News Long-Term Care Insurance Learning Center

You don't have to have all the answers today. But a conversation with a qualified LTC Insurance specialist is a smart first step.

Frequently Asked Questions About Long-Term Care and Retirement Planning

What is long-term care?

Long-term care refers to ongoing help with everyday activities due to aging, chronic illness, disability, injury, or cognitive decline such as dementia. This can include assistance with bathing, dressing, eating, mobility, medication reminders, and supervision for memory loss. Care may be provided at home, in assisted living, memory care, adult day care, or a nursing home.

How likely are you to need long-term care?

According to the U.S. Department of Health and Human Services, about 56% of Americans turning 65 today will need some form of long-term care during their lifetime. The need may last months or years depending on health conditions and longevity.

Does Medicare pay for long-term care?

No. Medicare and traditional health insurance generally only pay for short-term skilled care or rehabilitation after a hospital stay. They do not cover ongoing custodial care, such as help with daily living activities or supervision due to dementia. Medicaid may help cover long-term care, but typically only after strict income and asset requirements are met.

Why should long-term care planning be part of retirement planning?

Without a plan, long-term care costs can quickly drain retirement savings and place emotional and financial stress on family members. Planning ahead helps protect income, assets, independence, and your loved ones from becoming caregivers unexpectedly.

What does long-term care cost today?

Costs vary by location and type of care. According to LTC News national averages:

• Home health aides average about $5,673 monthly
• Adult day care averages about $1,719 monthly
• Assisted living base costs average about $5,005 monthly, plus surcharges
• Nursing homes average about $10,824 monthly for a private room

Costs are projected to rise dramatically over the next 20 years.

Why are long-term care costs expected to increase so much?

Inflation, labor shortages, increased longevity, rising health care expenses, and growing demand for caregivers are driving long-term care costs higher nationwide. Many care services are already experiencing workforce shortages, especially in home care and nursing facilities.

When is the best age to buy Long-Term Care Insurance?

Most specialists recommend exploring Long-Term Care Insurance in your 40s or 50s when premiums are lower and health qualifications are easier to meet. However, healthy individuals in their 60s may still have meaningful planning options available.

What happens if you wait too long to plan?

Waiting can reduce or eliminate your eligibility for Long-Term Care Insurance due to health changes. Premiums also increase with age. Delaying planning may leave you relying on savings, family caregivers, or Medicaid later in life.

What is the Long-Term Care Insurance Partnership Program?

The Partnership Program allows qualified Long-Term Care Insurance policyholders to protect assets dollar-for-dollar if they later need Medicaid assistance. These state-approved policies help preserve savings and reduce the risk of losing everything to extended care expenses.

Is Long-Term Care Insurance worth it?

For many people, Long-Term Care Insurance helps protect retirement savings, preserve independence, reduce family caregiving burdens, and provide access to quality care options. The value depends on your health, assets, income, retirement goals, and family situation.

Can you self-fund long-term care?

Self-funding may be possible for people with substantial liquid assets, but extended care can still significantly reduce wealth and legacy plans. Many specialists suggest that even affluent retirees benefit from Long-Term Care Insurance because of leverage, tax advantages, and asset protection features.

What types of Long-Term Care Insurance policies are available?

Consumers generally choose between:

• Traditional Long-Term Care Insurance policies
• Hybrid life insurance or annuity policies with long-term care riders
• Short-term cash indemnity policies

Each type has different benefits, underwriting rules, and premium structures.

How do you estimate future long-term care costs where you live?

Long-term care costs vary significantly by state and city. The LTC News Cost of Care Calculator helps you compare current local care costs and projected future expenses to better understand your retirement risk exposure.