Growing Economy and Low Unemployment Increase Long-Term Care Costs
If you’re like most American families, you have loved ones living longer than past generations. While longevity can be a gift, it also brings a significantly higher risk of needing long-term care services. Combined with a tight labor market and a growing older population, the costs and burdens of care are climbing faster than many expect—putting your retirement income and family stability at risk if you don’t plan ahead.
Low Unemployment, Aging Boomers, and Soaring Care Costs
Just reported in July, the June 2025, the U.S. unemployment rate stands at 4.1%—higher than the record lows seen before the pandemic, but still historically low compared with previous decades.Yet, despite modest job market cooling, the shortage of direct care workers persists, pushing long-term care costs even higher.
Markets Soar, Jobs Surge: Signs of Strong Economic Improvement in July 2025
U.S. economic indicators are showing clear signs of strength as the country moves into the second half of 2025, with financial markets hitting record highs, unemployment ticking lower, and productivity gains driving optimism across industries.
The Nasdaq Composite has surged roughly 26% since April, closing in late June above 20,600—a record for the index—while the S&P 500 and Dow Jones Industrial Average also notched fresh all-time highs.
Analysts attribute the rally to robust corporate earnings, easing tensions over trade with China, and renewed investor confidence in the tech sector’s ability to propel growth.
We’re seeing a Goldilocks environment where inflation is coming down and jobs are still being added, which is exactly what the market wanted. — Michael Arone, chief investment strategist at State Street Global Advisors, in an interview with Investors Business Daily.
The labor market remains a key pillar of the economy’s resilience. The U.S. added 147,000 jobs in June, well above expectations of 110,000, according to the latest Labor Department report. Economists say these trends point to healthy wage growth without sparking fears of runaway inflation. Jobless claims also continued their downward trajectory, suggesting employers are holding onto workers amid steady demand.
These indicators paint a picture of an economy regaining its footing after a period of uncertainty, with resilient job growth, rising wages, and renewed business investment laying the groundwork for a more stable second half of 2025.
Good News Can Be Challenging News with Aging
However, for those who are retired and nearing retirement, the impact of future long-term care costs can quickly destroy their successful retirement plan.
More than 58 million Americans are already 65+, and that number will surpass 80 million by 2040, according to updated Census Bureau projections.
Demand for caregivers is outstripping supply, and the labor shortage means providers must offer higher wages to attract and retain staff. The federal government is being aggressive in enforcing immigration laws, which could also put pressure on the available labor market for caregivers. This leads directly to higher costs for you or your loved ones when professional care becomes necessary.
Current Long-Term Care Costs: 2025 Data
The latest LTC News survey of long-term care costs in the United States shows national median costs as of July 2025:
- Home health aide: $5,524 per month (44-hour week)
- Assisted living: $4,874 per month before surcharges, adding up to $2000 or more
- Memory Care: $5,573 per month before surcharges, adding up to $2000 or more
- Private nursing home room: $10,540 per month
Costs are climbing as growing demand for services combines with persistent labor shortages. Cost can vary significantly by location, reflecting differences in local demand and workforce availability.
As people live longer, their likelihood of needing extended care grows, and the gap between care demand and the available workforce widens. Families must prepare for these realities before retirement.
Factors Driving Rising Long-Term Care Costs
- Workforce shortages: Not enough trained caregivers to meet the exploding demand.
- Wage pressures: States are raising minimum wages and tightening overtime rules.
- Regulatory changes: Stricter licensing and training requirements add to providers’ costs.
- Alzheimer’s surge: Over 7.2 million Americans now live with Alzheimer’s—expected to double by 2050, per the Alzheimer’s Association—requiring specialized, expensive care.
Long-Term Care Insurance: A Critical Part of Your Retirement Plan
Without Long-Term Care Insurance, the rising costs of professional care could quickly impact your income and erode your savings and burden your family with caregiving responsibilities. Modern Long-Term Care Insurance policies offer guaranteed, tax-free benefits that cover care in your home, assisted living, or nursing facilities—protecting assets and reducing family stress. Most policies include inflation protection, so your benefits keep pace with rising care costs.
Additionally, Long-Term Care Insurance Partnership programs, available in most states, provide dollar-for-dollar asset protection if you have a qualified policy.
When to Start Planning
The best time to plan is in your 40s or 50s—before retirement—when premiums are more affordable and you’re more likely to medically qualify for coverage. Waiting increases both costs and the risk of being declined for health reasons. In fact, most people acquire a Long-Term Care Insurance policy between the ages of 47 and 67.
You never know when an unexpected event—be it economic volatility, health crises, or family emergencies—could jeopardize your savings or force you into costly care prematurely. As you age, the risk of needing help with your daily living activities or requiring supervision due to memory loss increases dramatically. You can't predict when you will need extended care, nor can you predict the markets and the economy.
Take Action Now: Calculate, Compare, and Consult
- Calculate your local costs: Use the free LTC News Cost of Care Calculator to see detailed costs of long-term care services by zip code.
- Find tax incentives, long-term care resources, and partnership details by state with the LTC News State Resource page.
- Learn your options: The LTC News Long-Term Care Insurance Education Center offers guides on policy types, partnership benefits, and tax advantages.
- Consult a specialist: Work with an independent Long-Term Care Insurance specialist experienced in multiple top-rated carriers. Very few financial advisors fully understand long-term care underwriting, partnership rules, and policy design.
Don’t Leave Your Future to Chance
The odds of needing some type of long-term care are high—nearly 56% of adults 65+ will require care services, per the latest U.S. Department of Health and Human Services estimates. Early planning helps secure your finances and preserves your family’s quality of life.
By putting an affordable Long-Term Care Insurance policy in place, you safeguard your assets and give your loved ones peace of mind—no matter how long you live or what the economy is at any given time.